Brazil: Proposal raises the amount of pandemic aid to R$600 with reduced tax exemptions

RIO DE JANEIRO, BRAZIL – Bill 1409/21 raises the value of the emergency aid to be paid in 2021 due to the new coronavirus pandemic. For this, the text under analysis in the Chamber of Deputies cuts tax costs, including tax exemptions.

“We have resources so that families do not go through privation, reaching the limit of choosing between hunger or contamination. It is fair to update the taxation on the richest,” said the bill’s author, deputy Tabata Amaral (PDT-SP).

The proposal would fix the monthly installments of the emergency aid at R$600, with a limit of up to two per family, without discriminating against single people or those who did not receive the benefit in 2020. The mother of a family would receive double.

Tabata Amaral said that the bill is necessary in the face of the provisions foreseen in Provisional Measure 1039/21. “Fiscal responsibility is not an obstacle to social responsibility: on the contrary, it complements it,” she said.

Provisional Measure 1039/21 brings rules for this year’s payment of emergency aid to people in vulnerable situations due to the Covid-19 pandemic and, before 2020, limits the potential beneficiaries. R$44 billion has been set aside to pay four monthly installments of, on average, R$250.

To increase the amount available for the government to pay the R$600 monthly emergency aid, the bill proposes:

Suspension of exemptions or differentiated taxation in the high-income bracket in the Individual Income Tax (IRPF), using as a benchmark the current monthly remuneration ceiling for federal employees (R$39,293.32), for R$40 billion;

Suspension of deductions for health and education, for the owner or dependents, for taxpayers in the high-income bracket of the IRPF (R$5 billion);

Temporary and partial reduction of incentives or benefits of a tax, credit, and financial nature currently in effect (R$25 billion);

Revision of indemnity payments or payments above the ceiling for federal civil servants (R$ 3 billion); and

New rules for the military retirement and pension system, to adjust it to the regulations valid for civil servants (R$5 billion).

The text also reclassifies the federal government’s primary expenditures to include tax waivers in the spending ceiling (Constitutional Amendment 95). “Naturally, the ceiling applies not only to policies financed by direct spending but also to indirect spending,” explained Deputy Tabata Amaral.

“The proposal reconciles fiscal responsibility – because it is deficit or debt neutral – with social responsibility, by allowing that in this unprecedented crisis spending on the most vulnerable be expanded,” she concluded.

Source: Exame