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BRASILIA – With no votes to avoid overturning the veto to extend the payroll tax exemption, the government runs out of time to present an alternative proposal to the measure to parliamentarians until Monday.
According to sources from the economic team, the Executive’s project should involve the creation of a tax on digital transactions to compensate for a broad reduction in the contribution on salaries.
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For now, the session of Congress that will consider the veto is held for Wednesday. Yesterday, the president of the Senate, Davi Alcolumbre (DEM-AP), evaluated that the lifting of the veto is probable:
– The Senate feeling that I hear from all senators is to override the veto.
The articulation of the new proposal is being made by the government leader in Congress, Senator Eduardo Gomes (MDB-TO). According to the leader of the PSD in the Senate, Otto Alencar (BA), Gomes said that the compensation from the government would come within the tax reform.
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The measure must be part of a comprehensive economic package, which will be sent to the leaders of Congress next week and also includes the creation of the social program that will replace Bolsa Família.
The debate on payroll taxes began in June, when Congress approved the extension of the rule that today allows 17 labor-intensive sectors – which employ more than six million people – change 20% of the contribution to social security on wages at a rate of 1.5% to 4.5% on gross income.
With the exemption, the company does not stop paying taxes, adopts another model, depending on its activity.
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The measure is intended to boost job creation amid the recession, but expires in December. According to the new text, the regime would be valid until the end of 2021. President Jair Bolsonaro, however, vetoed the extension, on the recommendation of the Ministry of Economy and General Defense of the Union.
Zero salary at the minimum
The articulation around a new proposal advanced after the Minister of Economy, Paulo Guedes, received the parliamentarians in a meeting on Tuesday night. According to sources familiar with the talks, the economic team took advantage of the meeting to present an outline of the project.
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Guedes’ idea is to totally exempt the minimum wage in all sectors. For contracts with higher remuneration, the contribution would drop from 20% to 15%. The transaction tax would offset the loss. The measure will be included in the Chamber’s reform proposal, as a way to show support for the deputies and overcome resistance.
Yesterday, after a meeting at the Planalto Palace, Guedes defended the importance of seeking alternative sources of funds to cover the change, but did not specifically mention the new tax:
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– The priorities are jobs and income, resuming growth, within our fiscal responsibility program. We want to release taxes, help create jobs, so let’s do a tax replacement program.
The government leader in the Chamber, Ricardo Barros (PP-PR), affirmed that the measure will not result in an increase in the tax burden. And he said that the spending ceiling will be respected:
– We reaffirm our commitment to the spending cap and fiscal rigor. No proposal to be forwarded will address this issue. We look for resources within the Budget to be able to advance in the programs. If necessary, we will make a tax substitution, but there will be no increase in the tax burden.
