The Lula government published on Thursday morning (28) a summary of the measures in the spending cut package. The document was sent to the press during the press conference of ministers Fernando Haddad (Finance), Simone Tebet (Planning) and Rui Costa (Civil House).
The set of measures includes:
- new adjustment rule for the minimum wage
- limitation to the public of the salary bonus
- control over the granting of the Continuous Payment Benefit (BPC)
- reinforcement of inspection of Bolsa Família
- establish in a complementary law the exceptions to the civil service ceiling to limit “super salaries”
- measures aimed at the Armed Forces: setting a minimum age for joining the reserves, ending “fictitious death”, ending pension transfers and contributing 3.5% to the health fund
- limits on parliamentary amendments
- “triggers” to contain tax benefits and personnel expenses in case of a primary deficit or reduction in discretionary (free) expenses
- increase in the Income Tax exemption range to R$5,000, offset by setting a minimum effective rate for the richest
The document, however, does not provide all the details of the package. It does not inform, for example, what the effective minimum income tax rate will be for the richest taxpayers. But, according to Minister Haddad stated at the press conference, the government’s idea is to institute a minimum effective rate of 10% for those earning more than R$50,000 per month, or R$600,000 per year.
This rate will apply to all taxpayer income, including dividends, which are currently exempt from Income Tax. According to Haddad, anyone who receives R$600,000 per year will have to pay at least 10% of that – that is, R$60,000 – in income tax. If you have already raised R$35,000, for example, you will have to supplement it with R$25,000. If you paid more than R$60,000 in income tax, on the other hand, you will not be entitled to a refund of the excess.
Check out the full presentation of the cost cuts sent to the press below, or click here:
