Government announces R$147.3bn package to fight crisis
The federal government announced Monday a package of measures worth R$147.3 billion to ensure working capital for companies, prevent layoffs and, at the same time, help the more vulnerable people. It also made clear that, if necessary to support the Ministry of Health, it may alter the target for public accounts this year. Yet it said the spending cap would remain in place.
The measures launch a counter-strike on the economic effects of the coronavirus pandemics, Economy Minister Paulo Guedes said. They are concentrated in postponing for three months the payment of taxes such as the employer contribution to the Workers' Severance Fund (FGTS) and the federal portion of taxes that businesses included in the Simples regime pay. Contributions to the S System of professional-training institutions will be cut by half during this period.
More specifically to tackle the pandemic, the government announced the reduction of import duties on products of medical use through the end of the year and the temporary cut of the Tax on Industrialized Products (IPI) levied on domestic and imported goods necessary to fight covid-19.
The package's part meant to the more vulnerable part of the population includes early payment of the salary allowance to low-income workers, which will cost R$12.8 billion, in June. The release is usually made on the month of the worker's birthday. Moreover, balances not withdrawn from the funds made of social contributions PIS and Pasep will be transferred to the FGTS, to allow new withdrawals, which represent another R$21.5 billion, and the National Social Security Institute (INSS) will advance in May the second part of the 13th salary, a year-end bonus, to retirees and other pensioners.
Cash-transfer program Bolsa Família will have R$3.1 billion more to provide the benefit to a higher number of people. The idea is to include more than 1 million people. With the funds, it will be possible to serve all who are in line to join the program, National Treasury Secretary Mansueto Almeida said. The inclusion will be accelerated with the creation of a fast track.
According to economic officials, only the tax break and the addition of funds to Bolsa Família will have fiscal impact. In the case of Bolsa Família, the funds will come from other budget expenditures.
Several measures depend on Congress approval, including the transfer of funds to the FGTS, the destination of more money to Bolsa Família and the deferral of payments of the FGTS...
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