Find out how the cashback proposed by the tax reform will work
According to Constitutional Amendment 132 of 2023 — which deals with tax reform — the main objective of cashback is to reduce income inequalities. According to the bill sent by the government to the National Congress, people registered in the Single Registry for Social Programs of the Federal Government (CadÚnico) and who have a per capita monthly family income of up to half a minimum wage — the equivalent of R$706 currently.
This means that, in a house with four people, for example, their total income cannot exceed R$2,824 for them to have access to cashback. For Bianca Xavier, professor at FGV Direito Rio, the income cutoff established by the government leaves out part of the population that has few resources.
“Shouldn’t anyone who earns a thousand reais be included in this account? Isn’t the minimum wage already a consideration that anyone who earns below this amount should be considered low income? Wouldn’t it be better to increase this limit a little considering that the degree of poverty — half the minimum wage — seems to pay for very low income, but can low income be left out?, he asks.
Lawyer Thulio Carvalho, master in Law from the Pontifical Catholic University of São Paulo (PUC/SP), says that the requirement to register with CadÚnico to receive cashback has some gaps, but is not problematic.
“Selecting the target audience for this public policy based on CadÚnico would mean excluding all those who are marginalized in society that not even CadÚnico has, who don’t even know that this can generate benefits, such as cashback. But, on the other hand, it is residual the low-income population that doesn’t belong to CadÚnico. We have to assume that those who need it will go after it.”
As for the income limit to access the benefit being, at most, half a minimum wage per person, he believes that there are families with purchasing power above this range that could be included in the list of cashback beneficiaries. “It’s a matter of choice. There are budgetary issues that need to be taken into account. In the explanatory memorandum it was not mentioned why half a minimum wage instead of a minimum wage per capita. This could have been the subject of greater transparency on the part of the government”, states.
But he remembers that this would impact the VAT reference rate (CBS + IBS), currently estimated by the Ministry of Finance at 26.5%. “Limit the universe of beneficiaries of the cashback It also has to do with the need to preserve a general rate that is considered reasonable. 26.5% is the government’s estimate. Plus half a percentage point equals 27%, the highest VAT rate in the world.”
Cashback percentage
In the new consumption tax model, IPI, PIS and Cofins give way to CBS. ICMS and ISS leave the scene for the arrival of IBS.
According to the text, consumers will receive 100% of CBS and 20% of IBS back when they buy gas cylinders. Regarding the consumption of electricity, water, sewage and natural gas, there will be a refund of 50% of the CBS and 20% of the IBS. For other goods and services, the cashback will be 20% of the value of CBS and IBS.
Bianca Xavier explains that the refund of 20% of the value of taxes applies to all goods and services, except those considered harmful to health and the environment, taxed by the Selective Tax. “What he is saying is that IBS and CBS will be refunded for all products, except if the consumer buys a boat, car, cigarette, alcoholic drink and sugary drink. If he bought a computer, steak, he will be entitled to a refund of 20 %”, she exemplifies.
The Union may increase the percentages of cashback of CBS, while states and municipalities will be able to do the same with IBS.
Deadlines
When it comes to water, electricity and gas bills, the text says that the cashback it must be granted at the time the consumer is charged — that is, on the invoice. The same may apply to the supply of other goods and services whose payment period is monthly, such as the internet bill, for example.
For other cases, the bill establishes that the government must make the amounts available to the financial agent within 15 days after the purchase of the good or service. The financial agent, in turn, will have 10 days to transfer the cashback for the beneficiaries.
Bianca Xavier believes that the financial agent will be Caixa Econômica Federal, since the bank already transfers social benefits to those enrolled in CadÚnico, such as Bolsa Família. “The person will pay for the product. The Management Committee takes this tax money and sends it to the financial agent cashbackwhich will put this on the card for the citizen”, he explains.
According to the text written by the Ministry of Finance, citizens will have a maximum of 24 months (two years) to use the credits, but the Federal Revenue Service and the Steering Committee of states and municipalities will still be able to reduce this limit.
The refund of part of the CBS to low-income consumers begins in January 2027. The refund of part of the IBS begins in January 2029. The deadlines were defined based on the transition calendar from the current model to the future model of taxation.
By Brasil 61
