Bolsonaro says he will extend the payroll tax for another two years

President Jair Bolsonaro (no party) said this Thursday (11) that he will extend the extension of the companies’ payroll for another two years

“We decided to extend the payroll tax for another two years. This has to do with job retention. Whoever gets elected in 2022 will have 2023 to resolve this issue”, he said.

There was an expectation that, with the end of this tax benefit – expected to end at the end of this year – companies could lay off nearly 3 million workers next year, after the pandemic, stresses CNN policy commentator Gustavo Uribe.

Congress was already analyzing an extension of this benefit to 2026, but the president’s intention is to advance this process.

According to palace sources heard by Uribe, the president attended a meeting today with representatives of companies and the economic team to discuss the matter.

Pressure on public accounts

Bolsonaro’s announcement is yet another source of pressure for the federal budget, already quite limited in mandatory spending. Recently, the government said it would break the spending ceiling – the constitutional limit for public spending from one year to the next – to finance Auxílio Brasil.

In practice, by releasing companies, the government does not collect around R$ 8 billion a year, according to Gabriel Barros, from RPS, collected by CNN economic analyst Priscila Yazbek.

Thus, the Union needs to find a way to compensate for this loss of revenue.