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Economy Minister Paulo Guedes said on Thursday (12) that if there is a second wave of Covid-19 cases in the country, the extension of emergency aid payments will be “a certainty”.
Guedes participated in an event promoted by the Brazilian Association of Supermarkets (Abras), in which he spoke about the strategies and challenges for the economy in the coming months.
The emergency aid was approved by Congress to mitigate the losses of informal workers affected by the pandemic. Payments end in December of this year. According to Guedes, continuing to pay is not the government’s “plan A”, but it will be necessary if the country is affected by a second wave.
“Is there a possibility of an extension of emergency aid? Then we go to the other extreme. If there is a second wave of pandemic, it is not a possibility, it is a certainty. We will have to react, but it is not plan A. It is not what we are thinking now, ”said Guedes.
He reported that the government is spending around 10% of GDP, more than R $ 600 billion in 2020, to help the poor and combat the effects of the pandemic on employment and income. And he added that if a second wave hits Brazilians, it will be necessary to recreate the state of public calamity, which is in force this year with authorization from the National Congress, freeing up new expenses.
“The pandemic is going down, aid is going down and the economy is coming back. This is our reality, our plan A. ‘Ah, but a second wave has arrived.’ the experience we have now, recalibrating the instruments, “he said, adding that, in this case,” instead of spending 10% of GDP, as it was this year, we spent 4% [em 2021]”.
Tax on financial transactions
Guedes again cited the tax on financial transactions, to ease the payroll. He said that the economic team does not want to create taxes, but rather to promote a “tax substitution”, that is, to end some taxes, but adopt others.
“We don’t want to create a tax. We want to release payroll. When we talk about releasing payroll, we need to find a way to finance this exemption. And then we talk about the tax, actually the contribution, of the transactions. Including, mainly, the digital ones, which are the fastest growing in the country. It was in this sense that we considered this tax alternative, but always with the perspective that there is no increase in taxes, “he declared.
At the end of October, during a public hearing in the National Congress, the minister defended the creation of the digital tax, nicknamed by him, at that time, “digitax.” Then, at the same event, he declared that the tax was “dead.”
This Thursday, just before the municipal elections, with the first round scheduled for this weekend, the Minister of Economy reaffirmed that “politics is what gives the ‘timing’ of the reforms.”
And he added that “there will be no tax increase for those who pay taxes.” “But those who never paid will go up. The tax on dividends will increase, for those who were previously exempt. If we tax transactions, those who did not pay will start paying. These considerations are being made. Now is a political moment,” he said .
Economic recovery and inflation
Minister Guedes once again said that the Brazilian economy is resuming its level of activity in “V”, that is, a sharp decline with subsequent pronounced growth.
He also reported that he was surprised by the speed with the resumption, confirmed, according to him, by figures on tax collection and energy consumption, among other indicators.
“The image I use is that the economy was like a hibernating bear. Thanks to the supermarkets, the field maintained vital signs. We were in energy saving mode. Winter is over and the bear goes out and is hungry, it goes hunting. It’s like the economy is coming back, in strength, in V ”, he declared.
According to the minister, the increase in inflation registered in recent months is “temporary, transitory.” He also said that the government is vigilant and may adopt further reductions in the import tax on new products, if necessary. He said that when there is a “landing” of emergency aid, ending in 2021, and an increase in agricultural production, prices tend to fall.
“Even before that happens [redução da inflação], later, we anticipate. When the population began to complain of excessive increases, we examined, we acted quickly on rice and we are examining the entire food agenda, to eliminate the import tax, “he concluded.
