Only reform can curb tax expenditures
It is not possible to make a comprehensive and linear reduction of the current tax breaks with isolated measures, which could be adopted over the coming years. The reduction of benefits must be part of a tax reform. This is one conclusion of a technical note made by the Federal Revenue department, which was submitted to Congress last November, kept confidential since then and revealed on Monday by Valor reporter Murillo Camarotto.
On Tuesday, the Economy Ministry informed that tax subsidies had a "subtle decline" from 4.3% of GDP in 2018 to 4.2% in 2019. The reduction of so-called tax expenditures is considered essential to increase the available revenue and improve the situation of government accounts.
The Federal Revenue's technical note was a response to the budgetary guidelines law (LDO) for 2019, which ordered the president to submit to Congress a plan of revision of expenditures and revenues for the period of 2019 to 2022, including tax, financial or credit benefits, accompanied by the corresponding legislative proposals and estimates of annual financial impacts.
The LDO also stated that the government should present "timeline of reduction of each benefit, so that the total of revenue loss, in the period of ten years, doesn't surpass 2% of GDP."
The Federal Revenue presented an exhaustive list of measures to reduce tax benefits. If adopted, they would reduce tax expenditures by R$50 billion per year. It thus became clear to society what tax benefits the Federal Revenue considers could be reduced or eliminated.
In its technical note, the department said it would be imprudent to submit a timeline with isolated measures meant to eliminate the tax benefits over the coming years, because such initiative "may eliminate the chances of success of the tax reform."
In its analysis of tax expenditures, the Federal Revenue identifies different systems to calculate the taxes. According to it, these differences represent fragments of the Brazilian tax code, and for representing a differentiated treatment granted to specific sectors, categories of taxpayers, certain activities or certain geographic regions, they configure micro-tax regimes.
It also identified the permanent nature in the legislation (effect for undefined period), that is, notwithstanding its classification as indirect spending, tax expenditures have characteristics of treatment added to the tax code in such a way that the adjustments in the form of calculation of taxes reflect more a...
Para continuar a ler
PEÇA SUA AVALIAÇÃO