Brazil’s Economy Minister defends taxing the super-rich and exonerating companies

RIO DE JANEIRO, BRAZIL – To unlock the tax reform in the Senate, Brazil’s Minister of Economy, Paulo Guedes, said on May 9 that the government could present a “leaner” version of the project with the proposal to increase income tax on the super-rich and reduce taxes levied on companies.

“The time is now. We have already approved this reform in the Chamber [of Deputies]; it is stuck in the Senate. We can make a leaner version, taxing the super-rich and reducing the tax on companies,” said Guedes when presenting a new tool to monitor investments in the country.

The minister also defended the end of all taxation on industry “to allow Brazil, which has all the raw materials, to be a world power.” He said that the government is already following this path and mentioned the reduction in the Tax on Industrialized Products (IPI), promoted via decrees published at the end of last month.

The minister’s speech comes after Minister Alexandre de Moraes of the Federal Supreme Court (STF) suspended, on May 6, part of the IPI reduction, given the request of the Solidarity party.

The party claimed that the IPI reduction nationwide for products also produced in the Manaus Free Trade Zone would harm the competitive advantage and development of the region.

Moraes temporarily suspended the IPI reduction for all products produced in the Manaus Free Trade Zone, where a differentiated tax regime, protected by the Constitution, is in force. It includes shoes, TVs, stereos, furniture, and toys.

“The reduction in rates in the manner provided for by the impugned decrees, without the existence of compensatory measures for production in the Manaus Free Trade Zone, drastically reduces the comparative advantage of the center, thus threatening the very persistence of this constitutionally protected differentiated economic model,” the minister wrote.

INVESTMENT MONITOR

The Investment Monitor was launched on May 9 in partnership with the Inter-American Development Bank (IDB) and the financial support from the UK government through a fund dedicated to sustainable development.

Data and projections about the Brazilian economy and development plans for infrastructure, energy, connectivity, and sanitation are available on the platform. The idea is that the tool will provide details and assess the sustainability of all existing public-private partnership projects in Brazil.

“The platform will gather relevant information for investors about each project available, data from the historical series, social and environmental aspects, expansion plans, and all the necessary information to help illustrate not only investment projections but also to provide subsidies for decision making,” explained Daniella Marques, the ministry’s secretary of Productivity and Competitiveness.

With information from Agência Brasil