Ministro da Fazenda anuncia abertura da “caixa-preta” da renúncia fiscal para aumentar arrecadação federal

The Minister of Finance, Fernando Haddad, has announced that he will open what he calls the “black box of tax exemptions” to enable the execution of a new tax framework. The effort aims to increase federal revenue, as the government has committed to not increasing taxes.

The term was used during an interview with the newspaper O Estado de S.Paulo, in which the head of the ministry also advocated for the disclosure of the names of companies currently exempt from tax obligations.

To achieve this feat, Haddad will have to battle against the interests of the private sector, as at least 17 signatures of exemptions and special regimes amount to a waiver of more than R$ 450 billion in revenue. The budget and Treasury data are part of a survey by BTG Pactual.

If the government wants to achieve the target set for 2023, it will need to recover about one-third of these exemptions, or R$ 150 billion. Although it may seem simple, the task is complex, as the minister wants to avoid exemptions granted in the last PT administrations.

“I am not dealing with the [benefits] that were created by the PT. I am not dealing with the Simples [program] and I am not dealing with payroll exemptions. We are not going to re-impose the payroll tax,” he said.

If the promise is kept, the task of raising the necessary amount will be much more difficult, since a large portion of current tax exemptions come from the Simples program and payroll exemptions.

“Black box” of tax exemptions

The major tax exemptions made by the government begin with the Simples program, which generates a “loss” of R$ 88.5 billion. The list continues with personal income tax exemptions, which reach R$ 75.2 billion.

Also included in the list are the Manaus Free Trade Zone and similar areas (R$ 55.3 billion); incentives for agriculture and agribusiness (R$ 53.9 billion); non-profit organizations (R$ 35.4 billion); and savings accounts and credit for the real estate and agribusiness sectors (R$ 19.4 billion). The list of exemptions also includes:

– Medicines, pharmaceutical products, and medical equipment: R$ 18 billion;
– Incentives for worker benefits: R$ 16.2 billion;
– Incentives for regional development: R$ 15.4 billion;
– Exemptions in the automotive sector: R$ 10 billion;
– Other income tax exemptions: R$ 9.4 billion;
– Incentives for IT and automation: R$ 8.6 billion;
– Incentives for scientific research and technological innovation: R$ 7 billion;
– Exemptions for ships and aircraft: R$ 5.8 billion;
– Individual Microentrepreneurs (MEI): R$ 5.2 billion;
– Transfers to institutions linked to ProUni: R$ 3.2 billion;
– Exemptions for the purchase of cars for people with disabilities: R$ 0.8 billion;
– Other expenses: R$ 28.7 billion.

The disclosure of tax exemptions and tax relief is an important measure for checking the tax justice of a country. Once the entire range of tax exemptions is disclosed, it will help the government identify such areas where the taxpayer’s money is going unnecessarily.

In conclusion, opening the “black box of tax exemptions” is a welcome move by the Brazilian government. It will help to identify steps that can be taken in terms of tax justice and fiscal responsibility. The government has set the ball rolling, and it remains to be seen how successful it will be in implementing its plan.