The 25% IPI reduction for industrialized products, confirmed on Friday night (25) by the federal government, is, from a theoretical point of view, a measure that can help to reduce the prices of products to consumers and alleviate a inflation that is persistently high.
According to economists, however, in practice, there is a great risk that companies will incorporate the discount into their margins instead of passing the reductions forward, which would reduce the effectiveness of the measure.
“Companies have had tight margins for many years, before the 2020 crisis, and cost pressure ends up making transfers smaller,” said Sérgio Vale, chief economist at MB Associados. “This has a fiscal impact without really bringing relevant relief to the economy.”
The federal government published this Friday a decree that cuts the IPI (Tax on Industrialized Products) for the vast majority of products, as anticipated by CNN Brasil.
It is a promise that was already being made by the Minister of Economy, Paulo Guedes, in recent days, as a way of stimulating the economy.
The loss of revenue with the lower collection of IPI, to be divided between the federal government and the states, is estimated at R$ 19.6 billion, which should make it even more difficult to close the accounts of a government that is already in its path. of increased spending and already has a high public debt.
“In the long term, it is a measure that affects the collection and forces the government to either cut spending, or to take on more debt”, explains economist and professor at Insper Juliana Inhasz. “This increases risk amid a fiscal framework that is already difficult to sustain.”
Guedes, who spoke about the IPI reduction plan at an event earlier this week, has been pressing the key to the increase in revenue that the country has seen since last year, which, according to the minister, gives space necessary to accommodate the waiver or new expenses.
It is the same tone of the statement published by the Ministry of Economy this Friday, for the disclosure of the new IPI rates.
“This tax reduction occurs after the increase in federal tax collection observed over the past year, and will not affect the solvency of the public debt and the federal government’s commitment to fiscal consolidation,” the ministry said.
For Inhasz, from Insper, there is merit in the intention, at a time when an already strong rise in interest rates is not enough to cool inflation and new price pressures, especially with the crisis in Ukraine, are yet to come.
“From the economic and population point of view, it is an interesting measure because it helps to alleviate the pressure on prices; it’s the government cutting a little bit in its own flesh to hold back inflation”, says the economist.
“The question is whether the productive sector will pass on, after losing so much margin with the economic deterioration, and to what extent will this reach the end for consumers.”
Industry celebrates
For representatives of the industrial sector, the measure was welcome, seen as a palliative that helps to alleviate the famous heavy Brazilian tax burden on the productive sector while a tax reform is not forthcoming.
“The reduction is a step forward for the industry. The high taxation on the manufacturing industry means that the total amount of taxes paid by the sector in relation to the national tax burden is much higher than its share in the GDP, which harms the country’s development”, said, in a note, the Federation of Industries of the State of São Paulo (Fiesp).
“It is important to point out that we continue to defend vehemently a broad and isonomic tax reform, which reduces taxes and simplifies the bureaucratic mess that has become the Brazilian tax system”, completes the entity.
The National Association of Motor Vehicle Manufacturers (Anfavea) also praised the measure.
“The extinction of the IPI and the simplification of our tax system has been defended by Anfavea for a long time,” said the association in a statement.
“We welcome the relevant IPI reduction announced today, signaling the right direction on the part of the federal government. The reduction of the Brazil cost is beneficial not only for the industrial sector, but also for the generation of jobs, for consumers and for society as a whole.”
*With Pedro Zanatta
Source: CNN Brasil
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