Expert explains what is the tax reform cashback
However, many people have no idea how this will work in practice. This is the case of photographer Gabriel Moraes Oliveira, 24, who lives in Gama, in the Federal District. He asks, “What is tax reform cashback?”
Who answers the question is the international consultant Melina Rocha, specialist in Value Added Tax (VAT). She explains that the Proposed Amendment to the Constitution (PEC) 45/2019, which deals with the reform, brings the cashback mechanism, which means that part of the amount that people spend on products and services will be returned.
Few details are known about the final design of the mechanism, which should remain for regulation in a supplementary law, but the tendency is for the possibility to be restricted to lower-income families. Melina Rocha says that cashback aimed at specific groups is more appropriate than the existing general exemption, which includes goods and services used by everyone.
“Cashback, which is a personalized exemption, that is, it does not exempt the product, but exempts the family, is much more effective from the point of view of income redistribution in the country than the general exemption such as it currently has for ICMS, PIS and Cofins, which includes several products that are not really consumed by poorer families and are included in these exemptions and, which, in fact, are benefiting more richer families”, he evaluates.
The text that the deputies approved and that goes to the Senate foresees that the basic basket items will have zero tax. These items make up a large part of the consumption of low-income families. Therefore, there is still uncertainty about the products and services that will give the right to a refund of part of the tax paid.
By Brasil 61
