The government of Luiz Inácio Lula da Silva is considering exempting the collection of IR (Income Tax), still this year, for workers who earn up to two minimum wages. The measure is under discussion between the Planalto Palace and the economic team.
Today, the full exemption from IR includes monthly remuneration of up to R$ 1,903.98. From that value, there are four charging ranges — 7.5%, 15%, 22.5% and 27.5%. The last correction of the table occurred in 2015.
With the accumulated inflation over the last eight years, workers earning less than one and a half minimum wages began to pay taxes. Instead of a linear correction of the IR collection ranges, as has traditionally been done, the Lula government works with the hypothesis of increasing only the exemption to two minimum wages, but without changing the other ranges and for those who receive higher wages. For members of the economic team, this would concentrate the benefit on lower-income workers and reduce the fiscal impact of the measure.
If implemented, the exemption would only cover those who earn up to R$ 2,604. That is: a worker who receives R$ 10,000 or R$ 20,000 a month, for example, would remain exempt only in the old amount (R$ 1,903.98).
From then on, he would normally continue to pay the rate of 7.5% – which rises according to salary advancement. In preliminary government calculations, the impact is estimated at BRL 3 billion to BRL 5 billion. There is still no definition, but the initial idea is to make this change by provisional measure (MP).
In spite of the budgetary slack created by the PEC of the PEC of the Estoril, the Fiscal Responsibility Law (LRF) determines that sources of compensation are indicated. Since the election campaign, Lula had been promising income tax exemption for those earning up to R$5,000 a month.
He returned to the theme, on January 18, in a meeting with union representatives at the Planalto Palace. On the occasion, he reiterated the promise, although he did not indicate in what form and by what deadline. In addition to the greater exemption, an increase in the minimum wage to R$ 1,320 on May 1 is being considered. If that happens, workers with a monthly income of up to R$ 2,640 would not be charged.
Source: CNN Brasil
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