Tax reform is unanimous, says president of the Parliamentary Front for Entrepreneurship

“All sectors had absolutely impacts within their own business. No one has made a national impact that this cannot be done by one segment or another. So, there is unanimity which is: the reform has to go forward”, defends the parliamentarian.

The statement was made at a meeting between the FPE and the extraordinary secretary for Tax Reform at the Ministry of Finance, Bernard Appy, and representatives of the service sector, last week (21). At the time, Appy again criticized the large amount of tax benefits and warned parliamentarians about the risks of many exceptions and also the adoption of differentiated rates in the tax reform. The purpose of the reform, according to the secretary, is to bring simple and homogeneous rules and, therefore, have as few exceptions as possible.

In order to fulfill its role of reducing equality, it is natural that the tax reform reduces the tax burden in all sectors, as evaluated by economist and professor of MBAs at Fundação Getúlio Vargas, Carla Beni.

“Brazil taxes the equivalent of 43% per cent of its taxes on goods and services, with the maximum limit for these items in OECD countries being 32%. So, a reform that aims to reduce inequalities, it needs to work with a reduction in the tax burden for the segment of goods and services. Remembering that the higher the person’s income, the greater the consumption of services, so taxing services differently is a normal example that happens even in other countries”, argues the specialist.

In the Chamber of Deputies, since February, a working group has been in place to discuss the reform and prepare the ground for the procedure. The tendency is for the text to be presented in May, as the group’s coordinator, deputy Reginaldo Lopes (PT-MG) said. Also according to the parliamentarian, the objective is to build consensus so that, by October, the National Congress has already approved the new tax rule.

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Impacts of the tax reform

A study carried out by the Center for Public Leadership (CLP) indicates that, in line with the PECs being processed in the National Congress, the tax burden on consumption would fall from 35% to 31.5% among people who are at the bottom of the income distribution. Among the richest 2% of the population, it rises from 31.6% to 32.2%. In this way, taxation becomes more equitable for all income groups, with a reduction in the tax burden for 96% of Brazilians.

The CLP research was based on a survey of potential gain of around 20% for the Brazilian economy with the tax reform. From this, it would be possible to put 6 million Brazilians above the poverty line, in addition to taking 2 million people out of extreme poverty. There is also a reduction in the Gini index from 0.553 to 0.548 – the lower the indicator, the lower the inequality in the country.