Finance Minister Fernando Haddad must have an agreement that reduces the impact of IOF on the economy, as well as proposing structural measures.
The outcome of this negotiation between government and congress may come out today, before President Lula’s trip to France.
Haddad has already made it clear that he is not giving up the IOF, but admitted to calibrate the decree to correct imbalances. He talked to the presidents of the House and Senate to try to reach a consensus.
Alternatives under study
One of the alternatives under study to compensate for any revenue losses with IOF changes would be to look for sources of collection in the oil sector.
There is a rule under discussion at the National Petroleum Agency (ANP) that provides for the revision of the rules on the price of oil used to calculate governmental appearances, such as royalties.
This review, according to estimates from the economic team, could increase the collection by up to $ 10 billion per year. The Ministry of Mines and Energy also presented a series of measures in the area of oil and gas that could serve as an alternative to the IOF.
Central Bank Positioning
In a debate in Sao Paulo, Gabriel Galipolo, president of the Central Bank, argued that the IOF should not be used for collection or support for monetary policy. According to him, the IOF is a regulatory tax.
Galipolo said the Central Bank is waiting for the final version of the decree to evaluate with parcimonia how much IOF increase can be incorporated into BC projections.
He also stressed that the BC is still at the stage of discussing the rise cycle and that the decision will be made in the next Copom.
Economic scenario
In the economic scenario in Europe, the preview of consumer inflation data in the euro zone was 1.9%below the goal of the European Central Bank.
In China, industrial activity measured by the Global S&P PMI fell to 48.3 in May, indicating a contraction of the Chinese economy for the first time in 8 months.
This weak data of activity reinforces investor concerns about the trade war between China and the United States.
