“We Will Look For Alternatives”, Guedes Says After Financial Transaction Tax Vetoed

RIO DE JANEIRO, BRAZIL – Since President Bolsonaro discarded a tax along the lines of the extinct CPMF (Provisional Contribution on Financial Transactions), the economic team is assessing alternatives to offset exemptions on payroll taxes.

The Minister of Economy, Paulo Guedes, said on Wednesday, September 18th, that he will seek alternatives after the government ruled out the introduction of a tax on financial transactions as part of the tax reform.

Last Wednesday, September 11th, Federal Treasury Secretary Marcos Cintra was dismissed after a subordinate presented a proposal for a tax on payments. On the same day, President Jair Bolsonaro said he had ordered that a CPMF be excluded from the reform.

On Wednesday, Guedes said his team was working on a proposal based on three principles, which are now incomplete: unification of federal taxes, redrafting of income tax and relief from payroll taxes through the tax on transactions.

“The tax on transactions would allow us to lower labor charges. As this has now been discarded, we must look for alternatives, we will look for alternatives,” he said. The economic team is assessing alternatives to offset a tax exemption on the payroll. There is still no definition of what will be done.

On Tuesday night, September 17th, Guedes had again advocated the tax on transactions. According to him, the tax broadens the tax base, serves to replace of other taxes and has the potential to create jobs.

Guedes also said he will meet this week with Chamber of Deputies president, Rodrigo Maia (DEM-RJ), and Senate president, Davi Alcolumbre (DEM-AP), to discuss the potential formation of a committee that will discuss proposals for the tax reform.

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