Tax on Financial Transactions is an Option for Brazil, Says Economy Minister

RIO DE JANEIRO, BRAZIL – Brazil’s Minister of Economy Paulo Guedes said on Wednesday, August 21st, that he would soon forward to the National Congress a bill for tax reform.

According to him, it proposes the creation of a tax on financial transactions, similar to the Provisional Contribution on Financial Transactions (CPMF), created during the time Fernando Henrique Cardoso (FHC) was in office only to be eliminated ten years later.

“The transaction tax was used and supported by all Brazilian economists in the Fernando Henrique government. The tax has a high-speed, very intense taxation capacity. It puts money in the treasury quickly.”

Guedes explained that, as compensation for this new tax, there would be a reduction in payroll social security taxation to stimulate formal employment.

“If the tax is low, it does not compromise the economy so much. But this will be optional for the politicians. They have to decide. We can propose strong relief on payroll taxes in exchange for this new tax law. If Congress thinks the ramifications caused by this tax are worse than thirty million unemployed, they have to make the appropriate decision. It’s a difficult decision; it’s a tough job,” he said.

The minister gave the interview after meeting with the president of the Chamber of Deputies, Rodrigo Maia, the Central Bank’s president, Roberto Campos Neto, the Minister of Mines and Energy, Bento Albuquerque, and party leaders at the Ministry of Economy in Brasília.

Maia said that when the government forwards the tax reform bill, it will speed up the process in the Constitution and Justice Commission and reopen the discussion and amendment deadline.

According to Maia, the text of the federal government may be included in the bill for tax reform that is under consideration by a special committee of the Chamber of Deputies.

“We are making a very conciliatory tax proposal. We think that the federal government has to send part of it. And naturally, the Congress will fill in the rest”, added Guedes.

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