Tax reform approved in the Chamber is the first step towards the country’s reindustrialization, assesses an economist

The tax reform, approved by the Chamber of Deputies, is an “important step” for the country’s reindustrialization process. That’s because, in the assessment of economist José Luis Oreiro, the proposed changes will restore competitiveness to the sector. “The expectation is that the tax reform, added to the reduction in interest rates — another important component for the cost of industry is the cost of capital — will restore competitiveness to our manufacturing industry and will allow us to start the process of reindustrializing the economy Brazilian”, he argued.

The specialist also believes that the country will once again generate jobs in the industrial sector, in the medium and long term. “It is the sector that pays the highest wages and has the best quality jobs, because they are the jobs that require the most technological intensity,” he added.

Brazilian industry participates with 10% of the added value of the national GDP and contributes with 30% of the indirect taxes charged in the country, according to IBGE data. According to Oreiro, the new tax laws should represent fiscal relief for the productive sector.

“Our tax system does not have horizontal equity, that is, the idea that sectors of economic activity have to pay the same tax burden. In fact, industry is the sector that pays the most indirect taxes in Brazil, due, for example, to the concentration of a large number of taxes such as the IPI and the industrial property tax”, he exemplified.

In an official note published this Friday (7), the National Confederation of Industry (CNI) says it considers the approval of the tax reform “an achievement for the whole country”. “Awaited for more than 30 years, the modernization of the consumption tax system will allow the taxpayer, citizens and businessmen to pay their taxes in a more rational and transparent way, according to clear and compatible rules”, summarized the entity.

For the CNI, it is crucial that the tax reform advances quickly in the Senate, “maintaining the positive points of the proposal approved by the Chamber of Deputies”. “The model that we defend eliminates the main obstacle for Brazil to grow in a sustained way, by removing obstacles to investment and promoting a business environment that favors the growth of companies, the generation of jobs and the improvement of Brazilian income”, listed the President Robson Braga de Andrade in the statement.

end of cumulative

In the understanding of the CNI, one of the main bottlenecks of the current tax system is the taxes levied on taxes levied on goods and services. This distortion, considers the entity, represents an additional and hidden taxation, which accumulates at each stage of the consumption chain, from raw materials to the finished product reaching the consumer. “Dual IVA puts an end to cumulativeness by creating a clear and rational system of tax credits that will finally be able to be taken advantage of by companies from all sectors of the economy”, he celebrates.

Jose Luis Oreiro reinforces that the end of cumulativeness will reduce the costs of companies with accountants and tax lawyers. “With the introduction of the tax on goods and services, which will be charged at destination and not at origin, a lot of cumulative activities will be eliminated. In addition to simplifying the collection process, you will have only one tax rate on the industrialized product in all of Brazil, simplifying tax legislation. It is the only reform that actually increases the competitiveness of the Brazilian industry both in the domestic and international markets”, he maintained.

According to Deputy Reginaldo Lopes (PT-MG), coordinator of the Working Group on Tax Reform in the Chamber, it was past time to change the “most complex, bureaucratic and complicated tax system in the world”.

“It is a reform that will give the Brazilian economy competitiveness, productive efficiency. And the result of this is that we are going to have a modern tax system, a system that is an international standard and the Brazilian people will never again pay taxes or hidden taxes. He will know how much the product costs and how much the tax costs, and the consequence of this is that the Brazilian people will have cheaper products and services. The Brazilian people will be able to dream of the new job because Brazil will once again compete with the internal market, which today is dominated by imports that generate jobs abroad”, he guaranteed.