Mantega confirms payroll tax exemption for three more sectors.

Agency Brazil – Finance Minister Guido Mantega discussed today (28) with three more productive sectors changes to boost the economy and help industry in the face of the international economic crisis. One of the measures studied alters the payroll tax exemption policy. The announcement is scheduled for next Tuesday (3) and will be made at a ceremony at the Planalto Palace, as Mantega informed parliamentarians and businessmen who met with him this Wednesday.

In the case of payroll tax relief, the agreement is for the National Social Security Institute (INSS) rate to be reduced from 20% to zero, and businesses to opt for a contribution of approximately 1% of their revenue. Under the Plano Brasil Maior (Greater Brazil Plan), the rate that had been adopted until now, for some sectors, reached 1,5%.

Businessman Humberto Barbato, president of the Brazilian Association of the Electrical and Electronic Industry (Abinee), defended the measures which, according to him, are fundamental for national production to gain competitiveness against imported products, which increasingly arrive in the country with prices lower than those in the domestic market. The low price is caused by the dollar which, cheaper than the real, enters the country attracted by high interest rates and also because of mechanisms that cause an artificial devaluation of foreign currencies.

Contrary to what representatives from other sectors that have been negotiating with the government have announced, the representative from Abinee said that Mantega did not ask for a guarantee of job retention in exchange for benefits to the industry. “There was no demand for anything in return, especially since we are so overwhelmed that these measures would arrive at a time when the industry is in the ICU [intensive care unit]. Practically everything is being imported. There is no way we can give anything in exchange at this moment,” said Barbato.

But it is certain that the government hopes as a result not only to make companies regain competitive levels, but also to relieve the sector so that resources are available for investments.

According to the proposal announced by the representative of Abinee, the payroll tax exemption would not apply to the entire electricity sector, but only to those who produce 35 products used in the areas of electricity generation, transmission, and distribution. According to Barbato, other measures are being studied, such as the exemption of export taxes and a surcharge on imported products.

Also participating in the meeting at the Ministry of Finance were Rogério Mani, director of the Brazilian Association of the Plastics Industry (Abiplast), and José Martins, president of the National Association of Bus Manufacturers (Fabus).

Mani did not comment on the issues discussed at the meeting with Mantega, but José Martins spoke about them, detailing the impact on the bus industry. According to him, bus production in Brazil is practically artisanal and includes all components, from windows and doors to instrument panels and air conditioning. “These measures will substantially improve our competitiveness. We feel that the Chinese are already starting to attack the South American market. They want to establish bases in Latin America, which is a Brazilian market,” he emphasized.