Brazil’s pres­i­dent to pur­sue tax re­form

Kuwait Times - - BUSINESS -


Brazil will seek to sim­plify its tax code in 2017, Pres­i­dent Michel Te­mer said on Thurs­day, aim­ing to ex­pand busi­ness-friendly re­forms fol­low­ing pro­pos­als to mod­ify the pen­sion sys­tem and la­bor laws. Since tak­ing of­fice af­ter the ouster of his left­ist pre­de­ces­sor Dilma Rouss­eff, Te­mer has pledged to pur­sue struc­tural re­forms to lift Brazil from its deep­est eco­nomic re­ces­sion in decades.

This month, Congress sanc­tioned his pro­posal to limit growth of pub­lic spend­ing for the next 20 years, clear­ing the way for votes on other mea­sures. Brazil’s gen­er­ous pen­sion sys­tem must be over­hauled if the spend­ing cap is to have real ef­fect, of­fi­cials say. In a news con­fer­ence in the cap­i­tal BrasÌlia, Te­mer said he ex­pects Congress to swiftly ap­prove his plans to sim­plify the hir­ing of work­ers on tem­po­rary con­tracts, say­ing law­mak­ers have shown “strong sup­port” for his agenda.

“Why not pur­sue tax re­form now that plenty of bills have ad­vanced?” Te­mer said, adding that his gov­ern­ment would work hard to achieve the re­form next year. Econ­o­mists have long crit­i­cized Brazil’s com­plex tax sys­tem as a bar­rier to long-term growth. Com­pa­nies in Brazil spend on av­er­age 2,038 hours to do their taxes or about 12 times the av­er­age in the wealthy OECD group of na­tions, ac­cord­ing to the World Bank’s “Do­ing Busi­ness” in­dex.

Te­mer’s ad­vis­ers have floated a pro­posal to unify the fed­eral PIS and Cofins taxes to fund so­cial se­cu­rity. The gov­ern­ment could also ne­go­ti­ate with states to unify an in­ter-state tax known as ICMS, a mea­sure con­sid­ered cru­cial to re­duce le­gal un­cer­tain­ties. A gov­ern­ment source fa­mil­iar with the mat­ter told Reuters on Thurs­day that the re­form could in­clude sim­pli­fy­ing the tax regime of the oil and gas in­dus­try, as well as changes to levies on the fi­nan­cial sys­tem and the re­duc­tion of red tape in gen­eral.

“These are the gen­eral ideas of what should be done. It is still in em­bry­onic stages,” said the of­fi­cial, who asked not to be named be­cause he is not al­lowed to speak pub­licly. On Thurs­day, Te­mer also promised to sup­port any Con­gres­sional ef­forts to re­form Brazil’s po­lit­i­cal frame­work, a messy mul­ti­party sys­tem that crit­ics say makes Brazil’s elec­toral pol­i­tics com­pli­cated and of­ten cor­rupt. “The theme of po­lit­i­cal re­form be­longs to Congress, but we’ll in­cen­tivize it and sup­port it,” he said. Some law­mak­ers have called for rules lim­it­ing the pro­lif­er­a­tion of par­ties, blamed for fos­ter­ing cor­rup­tion by de­mand­ing broad coali­tion and deal-mak­ing in Congress. There are cur­rently 35 par­ties reg­is­tered in Brazil’s elec­toral court, with 26 rep­re­sented in the lower house of Congress. — Reuters

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