Guedes retreats from the retreat and now promises a 35% cut in the IPI

After a promise to increase the reduction of the IPI (Tax on Industrialized Products), from a cut of 25% to 33%, followed by a government retreat in that decision, Minister Paulo Guedes (Economy) spoke again this Wednesday (27). ) that the government intends to carry out “one more round” of reducing the IPI.

Now, the promise is to expand the tax cut to 35%.

“We’ve just reduced it by 25% and we’re going to another round, lowering the IPI drop to 35%,” Guedes said at a seminar organized by the Inter-American Development Bank (IDB) and the Federal Revenue Service.

According to the minister, the space for this was given by an unforeseen increase in revenue. “We are transforming the unexpected increase in collection, the excess collection, was well above our forecasts, according to the promises of the Bolsonaro government during the campaign, reducing the rates”, he continued.

The government has used the increase in federal revenue to announce tax cuts on the eve of the electoral calendar, in a bid that President Jair Bolsonaro (PL) will seek reelection. At the event, Guedes stated that indirect taxes, which are regressive, “incur the most perverse effect on the most fragile”.

Understand the back-and-forth of the IPI cut

On February 25, the Bolsonaro government published a decree effecting a 25% linear cut in the IPI for all products, with the exception of those containing tobacco. According to government officials interviewed by the Sheet at the time, the impact on public coffers was estimated at R$ 20 billion.

The measure, according to the Minister of Economy, would boost the Brazilian industrial park. “The 25% reduction in the IPI is a milestone in the beginning of Brazilian reindustrialization, after four decades of deindustrialization,” he said.

A month later, on March 24, Guedes stated that the government would reduce the IPI by 33%, expanding the initial tax cut announced. And there was an expectation that the decree would be edited by the Bolsonaro government days later, on March 31, which did not happen.

After being angered by a lawsuit by the Pros asking for the suspension of the decree that eased the tax burden on these goods, President Bolsonaro postponed the additional cut in the IPI.

THE Sheet showed that members of the government attributed the judicial attack to an articulation of the bench of parliamentarians from Amazonas, in an attempt to shield companies that produce in the Manaus Free Trade Zone.

This is because the reduction of the IPI would reduce the competitiveness of products made in the region, since they are already exempt from the tax and would not have any additional benefits.

At this Wednesday’s seminar, the minister once again highlighted the opportunity for Brazil to enter value chains in the face of the reconfiguration of global production chains as a result of both the Covid-19 pandemic and the war in Ukraine.

Guedes defended the simplification of the Brazilian tax system as a way of adapting to international standards, with an eye on access to the OECD (Organization for Economic Cooperation and Development).

The minister also argued in defense of the Income Tax reform project, held in the Senate, and taxation on corporate profits and dividends.

“We need to do our tax reform, we want access to the OECD, we are already on the list. We present our tax reform in that direction: lowering corporate taxes towards the 23.5% charged on average in the OECD, at the same time taxing profits and dividends”, he said.