Payroll tax breaks the market, says economist

“This type of measure of extension of tax incentives, exemptions, tax expenses, happens when the expiration date is coming to an end and tends to be extended. This time is no different, we are witnessing again this type of situation in the Bolsonaro government. It’s the kind of policy that divides the market. The sectors that benefit from it support it, but in the market as a whole there is a concern about how this type of policy will be accommodated from the point of view of the spending ceiling”, he says.

“At first, there is a loss of revenue due to the change in the way the employer’s contribution is collected, but the National Treasury is obliged to cover this loss. When this disbursement takes place, it impacts the spending ceiling. This divides the market a little, but there is a political component: as the government has difficulties in approving the Precatório PEC, it sees it as a way of putting a portion of businessmen to pressure the Senate for approval. The government gains an ally in this type of proposal”, says Viana.