Government considers raising income tax exemption to 2 minimum wages in 2023.
The idea, still under evaluation, is to at least partially fulfill one of Lula's campaign promises: to increase the tax exemption for workers earning up to 5 reais.
Reuters The government of President Luiz Inácio Lula da Silva is considering increasing the income tax exemption for workers earning up to two minimum wages this year, two sources with knowledge of the negotiations said on Saturday.
The idea, still under evaluation, is to at least partially fulfill one of Lula's campaign promises: to increase the tax exemption for workers earning up to 5 reais, thus increasing the disposable income of those who earn less in the country, the sources said on condition of anonymity.
A broader exemption, however, would represent a much greater revenue loss at a time when the economic team is seeking to reduce the large primary deficit expected for 2023 and signal fiscal discipline.
As Reuters reported on Friday, the government is also considering raising the minimum wage to 1.320 reais starting in May.
Therefore, the exemption, if approved, would apply to workers who earn up to 2.640 reais per month.
Workers who currently earn up to R$1.903,98 per month do not pay income tax, a value that has not been updated since 2015, effectively increasing the tax burden on Brazilians with lower salaries.
The information regarding the measure under consideration was initially published by the newspapers Folha de S.Paulo and Estado de S. Paulo.
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