The text of the reform has already passed through the Chamber of Deputies and must now be voted on by the Senate, which can make changes.
Among other points, the text provides:
- tax exemption for CLT workers who receive up to R$ 2.5 thousand;
- maintenance of the possibility of simplified declaration for all income groups;
- reduction of 7 percentage points in corporate tax and up to 1 percentage point in the social contribution rate,
- taxation and profits and dividends at a 15% rate.
According to Bruno Funchal, estimates with possible changes are still made by the Federal Revenue, responsible for calculating the impact of the changes.
Also according to the secretary, total government expenditure should fall from 19.5% of the Gross Domestic Product (GDP) to about 17.5% in the comparison between the end of the Michel Temer government (2016-2018) and the end of the Jair Bolsonaro government (2019-2022).
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“And the best way to pass this on to the population is to reduce the tax burden, which is very high. But there is a limit to this loss. As we are still in a process of fiscal consolidation, there is not so much room to reduce the burden [tributária]”he declared.
Chamber concludes vote on Income Tax Reform
According to calculations by the Independent Tax Institution, linked to the Senate, the project may generate loss of
- BRL 28.9 billion in 2022;
- BRL 11 billion in 2023;
- BRL 12.3 billion in 2024.
The calculation, according to the IFI, encompasses the federal government, states and municipalities and considers changes in the Corporate Income Tax (IRPJ), in the Social Contribution on Net Income (CSLL), the end of interest on equity, the reversal of benefits taxes, the correction of the Income Tax table, the taxation of profits and dividends and the limitation of the simplified discount.
Despite not having made an estimate, the agency updated the impacts arising from the measures related to real estate, financial investments and dividends remitted abroad to reach the final estimate published.
“The risks associated with the simulations are due to the lack of information and methodological difficulties arising from it. Thus, it is necessary to be clear that the estimates presented herein must be considered in light of these limitations. In any case, the accounts presented indicate that the approved text may have a negative impact on public accounts,” he informed.
For the National Committee of Secretaries of Finance of the States and DF (Comsefaz), the changes in the Income Tax could lead to an annual loss of R$ 41.3 billion in tax collection. Of this total, R$ 22.1 billion per year do not enter the Union’s public coffers.
The loss of revenue for states and municipalities, according to Comsefaz, totals BRL 19.3 billion annually.
Also according to Comsefaz, however, the Union will be compensated in R$ 18.55 billion due to the end of sectorial PIS/Cofins incentives. With that, the federal gap would fall to around R$ 3.5 billion. States and municipalities, says the committee, will not have the same compensation.