Levy agrees to increase inheritance tax.
According to the Finance Minister, raising taxes on the wealthy does more harm than good to the economy; the elite's contribution to fiscal adjustment would come from higher inheritance tax rates, a measure under study by the Federal Revenue Service and which will require Congressional approval; the PT's proposal, the taxation of profits and dividends, according to Levy, could punish and drive away productive foreign capital invested in the country; the Finance Minister also admits to taxing the donation of large sums of money, currently exempt from taxes.
247 - Finance Minister Joaquim Levy reportedly informed President Dilma Rousseff (PT) that the best way to tax wealth in Brazil would be to increase inheritance tax, burying the proposal for extra taxation on the richest. The implementation of Levy's proposals, currently under review by the Federal Revenue Service, will likely be added to the fiscal adjustment measures already announced, which for now only affect the working class. Taxing the wealthiest will depend on approval by the National Congress.
The minister's retreat frustrates the PT, Dilma's party, which advocates for harsher measures for the wealthy, such as taxing large fortunes or the distribution of profits and dividends. Senator Gleisi Hoffman (PT-PR) told Folha that a progressive tax on large fortunes would be much fairer. "There would be a triggering event annually, without depending on the taxpayer's death," she said.
Lindbergh Farias (RJ), for his part, would like to see profits and dividends taxed, including remittances abroad. The senator says that many business owners hold executive positions in their companies, but instead of receiving salaries, they are remunerated through profit distribution. Finance and Planning officials are studying four possibilities.
In addition to large fortunes, inheritances, and profits and dividends, taxing the donation of large sums of money, which are currently exempt from taxes, is also being considered.
Levy is actually against taxing the wealthiest because he believes such measures do more harm than good to the economy. However, given the need for revenue and pressure from PT congressmen, who have resisted revisions to workers' rights—the party's electoral base—Levy yielded and agreed to tax inheritance.
Levy argues that taxing profits and dividends could punish and drive away productive foreign capital invested in the country, since the subsidiaries of multinational companies send profits generated in Brazil back to their parent companies.