Luiza Trajano: IPI (tax on industrialized products) for white goods should increase.

Daniel Lima
Reporter from Agência Brasil

Brasilia - The vice-president of the Institute for Retail Development (IDV), Luiza Trajano, believes there will be an adjustment to the Tax on Industrialized Products (IPI) for white goods and furniture. Earlier, she participated in a meeting with the Minister of Finance, Guido Mantega, in Brasilia (DF). The tax exemption came into effect in February and ends next Sunday (June 30).

In addition to IDV, Mantega met with representatives from the National Association of Manufacturers of Electrical and Electronic Products (Eletros), the Brazilian Association of Furniture Industries (Abimóvel), and the Brazilian Association of Wood Panel Industries (Abipa).

"I believe there will be an adjustment. We can't say how big it will be. I'm hoping, and I'm being very clear, that the adjustment will be smaller so as not to impact inflation. If the rate [of IPI] is lower, we can even manage to hold it off. Now, if it's a very large rate, we'll hardly be able to hold it off," said Luiza Trajano.

The owner of Magazine Luiza added that the situation is complicated because the government has a fiscal adjustment to make, but the government needs to find a solution to some issues. "It's a difficult thing. You have to have fiscal adjustment and, at the same time, you can't have inflation; at the same time, you need to have sales because otherwise it doesn't generate jobs," she emphasized.

Luiza Trajano also pointed out that, regarding prices, both sectors do not want adjustments so as not to harm the "Minha Casa Melhor" (My Better Home) Program. Announced this month by President Dilma Rousseff, it benefits users of the "Minha Casa, Minha Vida" (My Home, My Life) Program. The suggestion, she informed, is that if the government has to raise the IPI (Tax on Industrialized Products), it should hold down the costs of inputs for both sectors, such as wood and steel.

According to her, the government has emphasized fiscal adjustment, but it's necessary to stimulate the economy while maintaining consumption. "If there isn't consumption, there are no jobs. Let's be honest: Brazil has brought more than 5 million Brazilians into the job market. So, there has to be consumption, and at the same time there has to be fiscal tightening. What I felt is that the government is very committed to making the fiscal adjustment," she assessed.

Flávio Rocha, president of the Institute for Retail Development (IDV), complained about the wave of popular demonstrations which, according to him, caused stores to remain closed for 10% of the time. Even with the stores open during the remaining time, there was a drop in the confidence index already observed by the Getulio Vargas Foundation (FGV), he reported. "The IDV understands that there was a very favorable recovery path, but unfortunately, it was halted by recent events. [Stores] stopped selling around 15% in the last two weeks, exceeding expectations. The Ministry of Finance has not commented on the end of the deadline for the reduced IPI (tax on industrialized products)."

Changes that may occur (IPI):

Edited by: Marcos Chagas