Created during the former president’s administration to help restaurants and the events sector during the pandemic, it is yet another example of a poorly evaluated public policy of tax exemptions, which is not isonomic and has no defined deadline. The initiative aimed to reset federal tax rates such as IRPJ, CSLL and PIS/Cofins for certain sectors. However, it has proven to be ineffective for the intended economic recovery and highlights structural problems in the formulation of fiscal policies in Brazil.
A few months ago, the president demonstrated in the country that they would reach R$646.6 billion in 2023, equivalent to 5.96% of GDP, according to a report from . This reaction, in addition to being detached from reality, reflects how our politicians grant special regimes without considering the consequences.
Initially, Perse listed 43 CNAEs as eligible for the benefit, as long as they belonged to the events sector. At the beginning of the current government, an ordinance reduced this list by half, generating legal disputes with 1,368 companies seeking to maintain the exemptions. Large companies such as iFood, Uber and 99taxi are among those that took action, arguing that the program had a fixed duration of 30 months and could not be changed during its validity.
In practice, tax incentives end up generating or in sectors, making it difficult to close programs. Once the benefits are granted, interest groups mobilize resources to maintain them, regardless of the effectiveness of the measures. This process, in turn, generates a perverse dynamic in which society bears the costs of concessions made to specific sectors. At the same time, ordinary citizens and businesspeople without the same power of influence end up paying higher taxes.
After all, each new tax benefit granted to a segment results in distortions that burden other taxpayers. For example, critics of tax reform rightly point to the possibility of Brazil having one of the world’s. However, we must remember that this scenario is, in fact, the consequence of a dysfunctional political process, where privileges are distributed without evaluation and whose revocation is extremely difficult. In the end, we enter a vicious cycle of tax benefits that creates a harmful dynamic in which society always bears the cost of concessions made to interest groups.
As a nation, we have difficulty implementing rules equally across all sectors, thanks to our political dynamics of granting privileges. We are granting special regimes to those who have lobbying power instead of creating a structure that guarantees tax reductions for everyone.
Without an assessment of results and impact, we continue to feed an unequal, inefficient tax structure that demands more and more taxes to be sustained. We need to adopt practices that value continuous evaluation and transparency, ensuring that the measures adopted serve the public interest and not specific groups.
LINK PRESENT: Did you like this text? Subscribers can access seven free accesses from any link per day. Just click the blue F below.
