The Jair Bolsonaro government (PL) is due to issue this Thursday (31) the decree that expands the linear cut in the IPI (Tax on Industrialized Products) rates, from 25% to 33%.
The measure had already been announced by the Minister of Economy, Paulo Guedes, although there was still no deadline for leaving.
In the same decree, the government intends to fulfill the political agreement with the Amazonas bench and remove from the reach of the court a list of goods that are produced in the Manaus Free Trade Zone.
The agreement was made to unlock the vote on the bill that changed the collection of ICMS (Tax on the Circulation of Goods and Services) on fuels and allowed the exemption of PIS/Cofins on diesel, cooking gas and aviation kerosene.
The Amazonas bench, which has among its members the leader of the MDB in the Senate, Eduardo Braga (AM), claimed the reversal of the IPI cut because the products from the Free Zone are already exempt from the tax and lose competitiveness when the burden of the others is reduced.
Among the products manufactured in the Free Zone are white goods, motorcycles and soft drink concentrates.
The parliamentarians presented a list of goods that should be removed from the scope of the IPI cut, but, according to a government source, only a part should be met.
On February 25, when he announced the initial 25% cut in the IPI, Guedes said that the measure would boost the Brazilian industrial park.
“[O imposto] was a stake in the Brazilian industry, and we are going to take that stake out,” he said at the time.
According to a government source, the tax reduction should be felt more along the production chain, including in the form of a profit margin for producers after a period of pressure amid the Covid-19 crisis.
The effect on consumers’ pockets, in turn, should be smaller. Many of the items achieved by the greater IPI exemption are inputs and parts used in production.
The 25% tax cut would generate an impact of BRL 21.1 billion in total revenue, but about half of that would be transferred to states and municipalities. Therefore, the final effect would be shared with the Union.
With the expansion of the exemption, the Economy has not yet informed if this estimate will grow, or if the reversal of the cuts in the rates of products of the Free Zone will compensate the effect.
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