End of tax exemptions starts with shooting the government in the foot

The government needs to increase its revenue by R$ 150 billion to make the fiscal framework targets viable, a new rule that replaces the spending ceiling. For this, concessions of tax exemptions will be reviewed and also the end of the exemption of some sectors.

For the columnist UOL José Paulo Kupfer, however, the end of exemptions began with the government’s “shot in the foot”.

After the government announced that it will end the tax exemption on international orders of up to US$ 50, Kupfer said during the program News Analysis that the measurement was an error. The decision mainly affects middle-class people who shop on sites like AliExpress, Shein and Shopee.

Haddad is looking to squeeze the rich into the income tax, but he started by trying to get the C- and lower-middle class. It was a mistake because I couldn’t start there [o fim das isenções fiscais] and, moreover, it was for the facilitator. It decided to catch and punish even those who do things legally to include everyone in that basket and avoid tax evasion.”
Jose Paulo Kupfer

High political cost. In Kupfer’s assessment, the measure could have a high political cost for the government. Seeking to increase revenue to enable an increase in public spending to meet social needs, the announced measure ends up affecting the poorest layers of society, where a large part of Lula’s electorate is located and, at first, leaving the richest of outside.

“The way this was done reversed the social hierarchy and it was done in a disastrous way. A job that will have political costs, said Kupfer.

Those who can least contribute the most. The columnist of UOL he also cited a survey that highlights that in Brazil people who earn up to two minimum wages pay the equivalent of 50% of their income in taxes. On the other hand, people earning 30 minimum wages or more have a tax burden of less than 25%. “In this country, those who can least contribute more, and that means that the collection is less than it could be”, he evaluated.

End of exemptions. Kupfer also pointed out that many sectors of the Brazilian economy are still unencumbered and there is no government forecast for the end of these tax exemptions. He highlighted that the budget forecast left by Paulo Guedes points to BRL 450 billion in tax expenditures for the government with exemptions and privileges. “I think ending these exemptions will improve [a arrecadação do governo]. The biggest exemption is from Simples Nacional, which are BRL 80 billion, followed by the Manaus Free Zone”.


O News Analysis airs on Tuesdays, Wednesdays and Thursdays at 7 pm.

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