By Arkady Petrov

RIO DE JANEIRO, BRAZIL – On the day that Bolsonaro complained of gay tourists and the Banco do Brasil commercial, creating a (desired?) media hype in the process, the country’s accounts took a R$ 50 billion hit. Unnoticed and uncommented.

While Bolsonaro handled the media, the Federal Supreme Court (STF) extended tax incentives for the Manaus Free Trade Zone
While Bolsonaro handled the media, the Federal Supreme Court (STF) extended tax incentives for the Manaus Free Trade Zone.

Here the chronology narrated by Vinicius Torres Freire, in Folha de S.Paulo: on Thursday (25th), President Jair Bolsonaro (PSL) began the day with new controversy, this time exceptionally scandalous, complaining of gay tourists coming to Brazil and vetoing a harmless bank commercial, promoting cultural diversity.

“Brazil cannot be the country of gay tourism. Anyone who wants to come here to have sex with women, feel free. Now, [Brazil] can not become known as a paradise for the gay world,” said Bolsonaro at breakfast with reporters.

In the afternoon, it was reported that Bolsonaro had taken off the air a Banco do Brasil commercial focused on diversity, with tattooed youngsters, colored people and a transsexual.

These actions had the (maybe) desired effect: guaranteed and absolute media attention at home and abroad. Banco do Brasil’s marketing director Delano Valentim resigned while LGBT spokespeople started firing. The media went crazy and the world wallowed in shock.

While Bolsonaro handled the media, the Federal Supreme Court (STF) extended tax incentives for the Manaus Free Trade Zone – which should cost the country a hefty R$49.7 billion (US$12.5 billion) over five years, as estimated by the National Treasury Attorney’s Office.

According to a court’s decision, companies buying IPI (Tax on Manufactured Products) tax free products from the Tax Free Zone are now entitled to include the tax amount as tax credit, as if IPI had been paid.

But no one knows where this money will come from.

There will most likely be cuts. Folha de S.Paulo comments that in order to offset the value granted in fiscal incentives, it would be necessary to cut all federal investment in road works such as highways (which was R$10 billion in 2018) or to reduce Family Grant by half.

1 COMMENT

  1. The STF may have approved using the tax credit for a tax that was never paid, but if the companies enjoying the tax break, the WTO rules deem that a typical trade practice associated with dumping which is prohibited.

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