RIO DE JANEIRO, BRAZIL – Job creation in the second semester could lead Brazil to close 2020 losing fewer jobs than in the 2015 – 2016 recession, said Minister of Economy Paulo Guedes yesterday, November 19th. The Minister again advocated eliminating some payroll tax withholdings and criticized the National Congress for banning debate on the issue.
“In the biggest global crisis, we could close the year with a third or a quarter of jobs that were lost in the self-imposed recession [of 2015 and 2016],” said Guedes, during the 41st Brazilian Congress on Private Pensions promoted by the Brazilian Association of Closed Complementary Pension Funds (ABRAPP).
According to Guedes, Brazil may close the year with about 300.000 jobs lost. Between January and September, according to the most recent data from the General Registry of Employed and Unemployed (CAGED), the country closed 558,600 jobs, against a negative balance of 1.144 million recorded between January and May.
Payroll tax deduction
At the event, the Minister again advocated eliminating some payroll tax withholdings for all business sectors, although not specifying where revenue would be generated to cover the benefit. “We are aware of the payroll tax withholding issue. We need to eliminate this issue, the collection of taxes on payroll. This tax is a disaster. It pushed 40 million Brazilians out of the formal market and undermines revenue for Social Security,” said Guedes.
On several occasions, the Minister has championed the creation of a tax on digital transactions to cover the loss of revenue with the elimination of payroll tax withholdings.
Although the government has not yet forwarded the proposal to Congress, Guedes criticized deputies for not proceeding with the debate. “The House banned this debate. An elected government wants to make a reform and it can’t, we’ll take care of the others, the spending, the expenses, we’ll begin with the Social Welfare, then the interest on debt,” he declared.
Second Covid wave
On the resurgence of Covid-19 cases in Brazil, Guedes said the phenomenon is restricted to some regions and is not widespread. “If the disease comes, we are in another dimension, we know how to act, but it’s not our plan,” the Minister said.
He reiterated that the economic team is focused on proceeding with structural reforms, such as tax and administrative reforms, and on preserving the spending cap, without resorting to populist programs.
Source: Agência Brasil