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On Tuesday (31/05), the Federal Chamber approved a provisional measure to overturn tax benefits for the petrochemical sector. The text has been modified to create a “transition rule” until 2028 for the end of the program. The matter now goes to the sanction of President Jair Bolsonaro (PL). The approved proposal establishes a transition period for the end of the Special Regime for the Chemical Industry (Reiq). The benefit reduces PIS/Pasep and Cofins rates for basic raw materials destined for petrochemical plants. According to the text approved by the Chamber, the benefit will have a gradual increase in charges until the end of 2027:
- Between April and December 2022: 1,65% for PIS/Pasep; and 7,6% for Cofins
- In 2023: 1,39% for PIS Pasep; and 6,4% for Cofins
- Between 2024 and 2027: 1,52% for PIS/Pasep; and 7% for Cofins
- In January 2028, the regime will be revoked, and the rates will return to 1,65% for PIS/Pasep and 7,6% for Cofins
Experts interviewed by local newspapers informed that the new 10% reduction in import rates for rice, beans and beef, announced, on May 23rd, will not have any effect on falling prices for the consumer. The reduction in rates was established to combat the escalation of inflation. However, the external supply of these foods is limited at the moment.
Central Bank President says subsidies could be a “good solution”
On Wednesday (01/06), during a conference organized by financial institutions, Central Bank (BC) President Roberto Campos Neto said that the adoption of subsidies for items such as food and energy could be a “good solution” to mitigate the “social cost” of inflation on the poor population. Neto explained that Brazil is benefiting from the global rise in prices, as the country’s revenue has reached records with the sale of commodities – grains, oil etc. For him, this increase in revenue can be used to help those who suffer the most from soaring prices. However, it also creates a problem, because once implemented, the subsidy can become a permanent expense.
