Lula defends readjustment of income tax so that the richest pay more

Brazilian President Luiz Inácio Lula da Silva said yesterday that he wants to readjust the Personal Income Tax table so that the richest pay more.

Lula explained that he wants to raise the income exemption for those who earn up to 5,000 reais (about US$1,000) and that he will start working on the tax reform, although he admitted that he would need the support of Congress.

“The dismissal and tax increase needs a law; it cannot be done by shouting. It has to be built,” he said.

“It takes a lot of convincing in Congress and organization of society,” commented the Brazilian president during an event at the Planalto Presidential Palace.

The Minister of Finance, Fernando Haddad, said the day before that the Government intends to vote on the income tax reform proposal in the year’s second half.

The part focused on the impacts on consumption should be voted on in the first half.

“Today’s poor who earn 3,000 reais (US$600) pay proportionally more than someone who earns 100,000 reais (US$20,000). Those who earn a lot pay little because those who earn a lot receive it as a dividend, as a profit, to pay little income tax,” Lula argued.

The lack of correction of the income tax table in recent years will mean that, in 2023, people earning one and a half minimum wages will have to pay tax for the first time.

The table was last updated in 2015, and the current exemption limit is almost R$1,903.98 (about US$380). With the minimum value of R$1,302 (US$260), those earning a salary and a half make R$1,953 (US$390), above the exemption range.

The correction of the income tax table is one of the central points of the new government’s economic agenda and Lula’s campaign promise.

“I fight with the economists of the Workers’ Party. People say that if we make an exemption of up to 5,000 reais (US$1,000), that’s 60 percent of that country’s revenue. So let’s change the logic, decrease for the poor and increase for the rich,” Lula declared.

“We will not achieve this correction if there is no mobilization of the Brazilian people to change, once in a lifetime, the fiscal policy to put the poor in the Union Budget and put the rich in the income tax, to see if the people collect enough to make social policy in this country,” he concluded.