Brazil lawmakers propose reforms combining consumption taxes


  • World
  • Wednesday, 07 Jun 2023

FILE PHOTO: A man walks near the National Congress building, amid the coronavirus disease (COVID-19) outbreak, in Brasilia, Brazil, March 19, 2021. REUTERS/Ueslei Marcelino

BRASILIA (Reuters) - Brazil's consumption tax reform advanced on Tuesday as a working group in Congress outlined a proposal to combine various levies into a value-added tax with separate federal and regional rates without increasing the overall tax burden on the economy.

The report represents an early step in a reform considered crucial by President Luiz Inacio Lula da Silva's administration. Lawmakers will now craft a formal text in greater detail to be put to a vote.

Congressman Aguinaldo Ribeiro, the lawmaker in charge of the working group report, said the lower house of Congress would vote on a bill in the first week of July, citing a timeline approved by House Speaker Arthur Lira.

According to the working group's proposal, the reform would merge federal taxes on consumption – namely IPI, PIS, and Cofins – into one tax, while the state-level ICMS tax and municipal-level ISS tax would combine to form a separate rate.

The working group's report recognized the possibility of exemptions in the standard tax rates, including a reduced rate for some goods and services related to health, education, public transportation, regional aviation and rural production.

The text also proposed the implementation of a different treatment of food items included in a government-designated list of essential products.

Under the recommendations, tax collection would shift from the current practice based on where goods are produced to a system reflecting where goods are consumed.

This adjustment is expected to benefit wealthier and more populous states, and the working group proposed a transition period of "some years" for implementation.

"The transition will be made in such a way as to maintain the collection of current taxes as a proportion of GDP (gross domestic product). Under no circumstances will there be an increase of the tax burden," the report said.

(Reporting by Marcela Ayres; Editing by Jamie Freed)

Follow us on our official WhatsApp channel for breaking news alerts and key updates!
   

Next In World

Analysis-Honeymoon for Mexico's Sheinbaum tainted by mentor's reform
Blinken says Russia received missiles from Iran, warns of threat to European security
Death toll from capsized migrant boat offshore Senegal rises to 26
UK and US united over tackling Iran's influence, Lammy and Blinken say
Frenchman on trial for rape of drugged wife is hospitalised, lawyer says
UK financial watchdog charges man with running illegal crypto ATMs
Northern Ireland's Donaldson pleads not guilty to historical sex offences
Ukraine identifies Russian suspect in July attack on children's hospital
Trump, Harris to clash at debate that could reshape 2024 race
Russia reports new gains in Donbas, saying Ukraine's incursion has failed to distract it

Others Also Read