‘I didn’t give up, in any way’, says Guedes on tax along the lines of the former CPMF – 10/16/2020

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The Minister of Economy, Paulo Guedes, said today that he has not given up on the implementation of a tax on transactions, in line with the old CPMF (Provisional Contribution on Financial Transactions), to pay for the wide exemption from the payroll of companies.

In an event promoted by XP Investimentos, he also denied that the government will extend emergency aid to 2021, stressing that there will be respect for the spending cap rule, after the calamity period this year due to the Covid-19 pandemic.

The day before, Guedes had told CNN Brasil that he might give up on the new tax. Tonight, however, he justified giving wrong information in lieu of his usual explanation of the need for such a tax to promote a greater good – the generation of jobs.

“I don’t care if the tax is ugly as long as it works by creating new jobs. It’s necessary. But then I gave the wrong information yesterday, because that’s the feeling. First I said, ‘Well, maybe I should have talked to her. (reporter) ‘. Then when I talk to her, it’s the same subject, the same crap, which is:’ Are you creating a new CPMF? ‘No, not at all. Instead of explaining, I said:’ Listen well, I forgot, I give up, “” he said.

The minister said he “by no means” gave up the onslaught.

“I am not a man to give up on things easily,” he amended.

Guedes has always shown himself in favor of the establishment of a broad-based transaction tax to pay for the exemption of companies’ payroll, but the economic team has not yet formalized his proposal.

The payroll tax relief currently affects more than 6 million workers in 17 sectors. The measure is valid until the end of the year. Its expansion until 2021 was vetoed by President Jair Bolsonaro (without a party) in early July, but Congress threatens to overturn this veto.

The exemption is considered by some as fundamental for the creation of jobs and thus help in the economic recovery due to the crisis caused by the pandemic of the coronavirus. With the measure, companies can replace the social security contribution of 20% on wages with a lower rate on gross revenue.

Regarding the possible extension of emergency aid for the next year, the minister took a position after concerns in this regard had once again affected the financial market on Friday.

No emergency aid in 2021

“There is no plan to extend the aid, none. This is not true. This is not our intention, it is not what the president said. It is not what the Minister of Economy wants. No way,” he said.

“The disease (Covid-19) is decreasing and, as it decreases, Brazil is recovering in ‘V“and we must take responsibility for our budget and we must show that we are responsible, and strong, and resilient enough to pay for our war, instead of rolling over to our children in the future,” he added.

Echoing recent speeches, the minister again defended that, if the country is hit again by a pandemic in another year, the reaction will be quick and strong just as in 2020. Apart from this possibility, he reiterated that it is necessary to respect the spending ceiling , which limits the growth of public spending to inflation measured in the previous year.

“When the pandemic hit us, we created an emergency regime. Now, we cannot use the excuse of the emergency regime to blow up the spending ceiling,” he said.

‘Accelerate privatization’

According to Guedes, the government is “just beginning”. “In the first two years, we were trying to survive. Next year, we have to accelerate privatizations, honor the spending ceiling and keep interest rates low,” said the minister.

“Congress is doing a great job and is entirely connected to us. We have a center-right majority that is being built. Rodrigo Maia is very helpful,” he added, citing the president of the Chamber of Deputies.

(With information from Reuters)

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