Pacheco says he supports tax package “with restrictions and possibility of increase”

The President of the Senate, Rodrigo Pacheco (PSD-MG)said this Friday (29) that his position in relation to the spending cut package announced this week by the president’s government Luiz Inácio Lula da Silva (PT) it is “support with restrictions and the possibility of increase”.

In an interview with CNN BrazilPacheco stated that the proposal also presented by the government to exempt those earning up to R$5,000 per month from Income Tax (IR) will be analyzed “further forward” and under the condition that there is fiscal space to adopt the measure.

The Minister of Finance, Fernando Haddad (PT)states that the exemption will be fiscally neutral, as it will be offset by taxation on those with a monthly income exceeding R$50,000 and other measures.

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Pacheco: IR exemption provided for in package will only happen if there are “fiscal conditions”

According to the president of the Senate, “this is a discussion going forward, which will largely depend on Brazil’s ability to grow and generate wealth, without increasing taxes”

Earlier, in a note, Pacheco stated that the IR exemption will only become a reality if there are “fiscal conditions” for it, Pacheco pointed out.

“The issue of income tax exemption, although it is everyone’s desire, is not on the agenda for now and can only happen if (and only if) we have the fiscal conditions for it. If we don’t have it, it won’t happen”, said the president of the Senate.

Still according to Pacheco, “this is a discussion going forward, which will depend a lot on Brazil’s ability to grow and generate wealth, without increasing taxes”.

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What awaits the government

Currently, the income tax exemption limit is R$2,824, for R$5,000 per month. To offset the fiscal impact, the government will propose a minimum taxation for individuals who receive more than R$50,000.

Of the total number of beneficiaries, 10 million taxpayers will be completely exempt, while 16 million will pay less tax. On the other hand, the creation of a minimum tax of 10% for those earning more than R$50,000 per month should reach around 100,000 people.

The government’s calculations indicate that the correction of the IR table will result in a loss of revenue estimated at R$35 billion per year. However, the introduction of the minimum tax on the richest seeks to balance the fiscal impact of the measure.

(With Reuters)