Increased IR exemption is the first significant reform on income, says Haddad

The federal government formalized, on Tuesday (18), the sending to the congress of the bill that proposes an increase in the Income Tax Exemption (IR) range for income of up to R $ 5,000. The change, if approved, will start to be valid in 2026.

During the launch event, held at the Planalto Palace, along with President Luiz Inacio Lula da Silva (PT), Finance Minister Fernando Haddad said that the proposal represents the first significant tax reform aimed at income in the country.

The measure, which is a campaign promise of President Lula, aims to relieve the tax burden to Brazilians with income of up to $ 5,000 per month, a group that was still marginalized in terms of exemption. The proposal still needs to go through the congress, where it should be debated.

Haddad pointed out that, although Brazil appears among the top ten economies in the world, the country is also among the ten most unequal nations on the planet. “How can a nation that is among the richest appear among the most unequal?” Asked the minister. He stressed that one of the main reasons for this inequality is the tax system, which, according to him, takes away from the poorest to benefit the richest.

The reform, according to the minister, represents a “gigantic” step to correct the distortions of taxation in Brazil. Haddad also referred to the recent approval of the tax reform on consumption, stating that it will exhaust investments and exports, as well as returning taxes paid by families in CadÚnico.

The minister also made a point of reinforcing that the measure is a promise fulfilled by President Lula. “Many people criticized the proposal, many thought it was unenforceable. But we are sure that it is the beginning of a way to reverse income inequality,” Haddad said, calling the day “historical” and noting that Brazil is doing social justice.

Haddad also stated that the new proposal will be responsible for redistributing the tax burden, increasing the contribution of the richest 0.2% of the company, which pay little or no tax. According to him, lower income workers, on the other hand, they end up paying proportionally more.

In addition, the economic team proposed an increase in taxation for Brazilians who earn over $ 600,000 per year. There will be a progressive rate scaling up to R $ 1 million, and most Brazilians affected by the adjustment will be in the upper range, where the contribution will be more significant.

“It’s a balanced project from the tax point of view,” concluded the minister. “The goal is not to raise more or less, but to do tax justice,” he said.