Brazil’s tax reform could lead to economic destabilization, Bolsonaro says

On Sunday, former President Jair Bolsonaro expressed concerns that the proposed tax reform could potentially induce inflation, unemployment, and economic disruption.

The statement was posted on his Twitter account.

Bolsonaro’s comments came in response to criticism from Valdemar Costa Neto, president of Bolsonaro’s party, PL, who had previously pointed out that Bolsonaro was being negatively vocal about the tax reform.

Bolsonaro expressed concerns about aspects of the tax reform, including the potential for an undefined base rate, ambiguity in operational tax division details among federative entities, and the possible surcharge on goods and services considered detrimental to health or the environment.

The tax reform bill, passed by the Chamber of Deputies on July 6, proposes a selective tax on the production, sales, or import of such goods and services, excluding exports.

The legislation does not detail which items will be subject to surcharge.

Bolsonaro argues that this could potentially impact the agricultural sector by increasing the cost of food.

The approved bill sets a standard tax rate of 40% on certain goods and services, including agricultural inputs.

Furthermore, he suggested that the reform could increase transportation costs due to potentially higher fuel prices.

The reform does specify that fuels will be subject to a unique tax regime with a standard rate, with taxation applied only once across a product or service’s entire chain.

Therefore, fossil fuels will not be additionally taxed with the selective tax.

Bolsonaro fears that unchecked surcharges, which don’t require congressional approval, could destabilize the economy, paving the way for drastic ideological changes.

For the full picture, see our Brazil Tax Reform: Complete Guide.

More: Brazil news in English, every day from The Rio Times.

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