The minimum wage should rise to R$ 1,310 in 2023. The estimate is from the Ministry of Economy and takes into account the strong inflation of recent months. If confirmed, the new level should lead Brazilians to an unprecedented situation: workers with an income of just 1.5 times the minimum wage will pay Income Tax. In addition to high inflation, the situation is due to the non-update of the tax table, which has been frozen since 2015.
Brazil should enter 2023 for the eighth consecutive year without updating the Income Tax table. The last update has been in effect since April 2015 and establishes that workers with monthly income from R$ 1,903.98 must pay income tax in the first range, at a rate of 7.5%.
When this table was announced, the minimum wage was R$ 788 and it was necessary to have an income equivalent to 2.4 times the minimum to be included in the tax table. Since then, this ratio has dropped year after year.
In 2022, the minimum is R$ 1,212 and the incidence is from 1.6 times the salary. For comparison: in 1994, when the real was launched, it was necessary to earn eight minimum wages to have the salary bitten by the tax authorities.
“This is not necessarily a new problem. In recent decades, all governments, whether left or right, have left with a table losing to inflation. The difference is that, since 2015, we have not had any updates”, says the president of the National Association of Tax Auditors of the Federal Revenue of Brazil (Unafisco Nacional), Mauro Silva.
When the IR table is not updated and salaries are adjusted for inflation, the bar that establishes the incidence of the tax, in practice, decreases.
Unafisco’s calculations indicate that, currently, around 15 million Brazilians pay IR simply by not updating the table, which is 134% out of step with the accumulated inflation since 1995. . This happens because the government does not correct the table”, says Silva.
Government proposed to update the table
Updating the IR table was even identified as one of the priorities of the economic team in the electoral campaign and at the beginning of the government. There was even a promise of exemption from the IR for everyone with income up to R$ 5 thousand. The topic, however, has lost importance in discussions with the pandemic and has long ceased to be a priority.
In 2021, the federal government forwarded a project to the National Congress that updated the IR table with the start of the levy of the tax for workers with income from R$ 2,500 – which would indicate a 31% increase in the value of the first range.
The text, which was part of the tax reform, was approved by the Chamber last year, but since then it has been stalled in the Senate. There, the text arrived in September and, since then, it has been in the Economic Affairs Committee (CAE).
Unafisco estimates that, for every 1 percentage point of inflation not updated in the IR table, collection increases by R$ 2 billion. Taking into account that the 2021 inflation reached 10%, the collection increased by about R$ 20 billion just by not updating the table, says Mauro Silva.
Sought, the Ministry of Economy reported that it will not comment on the subject.
Source: CNN Brasil
