06/15/2024 – 18:17
The vice-president of the Republic and minister of Development, Industry, Commerce and Services, Geraldo Alckmin, said that the government is committed to the fiscal framework and that, to achieve this, it will be necessary to reduce spending and improve revenue collection by combating evasion. Alckmin gave the statement two days after the Minister of Finance, Fernando Haddad, defended the acceleration of the agenda review of public spending.
O tax framework is a set of measures, rules and parameters for the conduct of fiscal policy approved in 2023 to replace the spending cap policy that had been in force since 2016 and froze expenses, authorizing only inflationary correction from one year to the next. This rule, however, was breached several times. With the new fiscal policy adopted last year, the expenditure limit became more flexible and takes into account the primary result target.
Related news:
“It is good to remember that in 2020 the primary deficit was almost 10% of GDP [Produto Interno Bruto]. Today we are talking about not having even a 0.5% deficit, and the goal is to reach zero. On the one hand, it is to improve revenue by combating tax evasion. And, on the other, it is to reduce expenses. It means analyzing the efficiency of each investment. Do more with less money”, stated the vice president.
According to Alckmin, there is still no date set for announcing cuts. He highlighted, however, that it will be necessary to make adjustments that bring faster results and also those with medium and long-term effects.
“Even if I have a measure that will extend over several years, you bring it to present value. With better fiscal policy, we will have cheaper interest rates and better monetary policy. But it is good to celebrate that Brazil grew 2.9% in 2023. Workers’ income grew, it was the highest since the Real Plan, GDP grew, and Brazil’s risk fell, which was 254 and was 170”, he added.
Tax reform
Alckmin also assessed that the regulation of tax reform will require the government to dialogue with the National Congress. He considered, however, that the most difficult thing has already been done.
“To approve the tax reform, it took three-fifths. It required a qualified majority because it was a constitutional amendment. The other measures will not need to change the Constitution. They will be by ordinary law. So we are optimistic. The way is dialogue. Nothing is easy, but we are showing, arguing. In politics you don’t oblige, you convince, you conquer.”
Approved last year, the tax reform established that – from 2033 – the ICMS [Imposto sobre Circulação de Mercadorias e Serviços] and the IPI [Imposto sobre Produtos Industrializados] will be unified with three other taxes (ISS, PIS and Cofins), in order to simplify the system. There would, therefore, be a single charge, with the collection being divided between the federal sphere (Contribution on Goods and Services, CBS) and the state and municipal spheres (Tax on Goods and Services, IBS). Some rules, however, still need to be regulated.
“She [reforma] has the benefit of simplification. It completely exempts exports, completely exempts investment. This then encourages exports and investment to grow. IPEA studies [Instituto de Pesquisa Econômica Aplicada] show that, in 15 years, it will increase GDP by 12%, investments will grow by 14% and exports will grow by 17%”, highlighted Alckmin. He recalled that the implementation of the measures will be gradual.
The vice-president’s statements were made after the end of the 17th Road Freight Transport Congress of the Federation of Cargo Transport Companies of the State of São Paulo, in Campos do Jordão. He also highlighted the importance of the sector, highlighting that almost three quarters of Brazilian wealth is circulated by cargo transporters.
“The current Lula government is recovering the highways, it has already improved the quality of the BRs with record investment, and the PAC [Programa de Aceleração do Crescimento] will bring even more investment. I just arrived from Saudi Arabia and China. Brazil must significantly increase exports, and we will need a lot to transport all this wealth”, concluded Geraldo Alckmin.
#Alckmin #highlights #governments #commitment #fiscal #framework