In a document addressed to the Bolsonaro team, Fazenda suggests cutting spending and raising taxes

SÃO PAULO – In the three weeks following the inauguration of President-elect Jair Bolsonaro (PSL), the Ministry of Finance sent a document to the government team in charge of the transition, stressing the need to make a tax commitment, while stating that it was impossible. out of a primary deficit of 2% of GDP (Gross Domestic Product) for a surplus that stabilizes the public debt to a not very high level only with the reduction in spending. The information was given Tuesday (11) by the newspaper Valor Econômico .

According to the publication, the portfolio once again argued that, to ensure fiscal sustainability, a fiscal effort equivalent to 4 GDP points of GDP would be needed in the coming years, which amounts to nearly $ 280 billion. from R $. This can be done largely through expenditure control, especially in the case of the mandatory expenditure path. But, according to the document, the bill will not be closed without increasing the revenue of the Union, which should be achieved by combining reduction in tax benefits and increased tax burden – which goes to the end. Bolsonaro defended during

According to the report, the text entitled "Brazilian fiscal overview" presents three scenarios for the future trajectory of public accounts in the coming years: without reforms, with tax reforms and reforms fiscal and microeconomic. In the first case, the current team estimates that economic growth will be very low, by 0.7% only in 2019, with a contraction of 0.5% in 2020, 0.6% in 2021 and 0.4% %. in 2022. In contrast, if the government did the homework, growth should reach the respective annual rates of 2.6%, 2.9%, 3.4% and 3.5%.

Even in the most optimistic picture, technicians warn that the future government should still generate revenue. One of the measures would be the increase from 11% to 14% of the employee contribution rate to the RPPS (Social Protection Plan). Other would be the end of the income tax exemption for LCI / LCA applications, the increase of five percentage points of the IR on financial applications and changing the form and frequency of tax collection on closed-end funds. A series of sectoral measures reducing subsidies were also reported in

but the most controversial is expenditure, with a change in the method of correcting the minimum wage. One of the scenarios envisioned would be to apply adjustments solely to the help of the Inflation Indicator (INPC), which ends with real increases. The most optimistic scenario for the public accounts with which the Treasury works is also based on the approval of the pension reform, in the words of the text appreciated by the deputies and approved by a special committee of the House. That is, with the increase of the minimum age of 62 for women and 65 for men, in addition to the contribution period of 15 to 25 years.

The paper estimates that with fiscal and microeconomic reforms, it would be possible to have a primary surplus of only 0.8% of GDP in 2022. Moreover, without these measures, the primary deficit would increase to 3.5% of GDP during the last year of the Bolsonaro administration. The text is an exercise of financial impact "which indicates no intention of suggestion to send proposals".

Focus on spending
In an interview with CBN Radio on Tuesday, Minister Eduardo Guardia said the study sought to clarify the reality and the fiscal challenges facing the country. "Our message in the document is that the central problem is the fiscal aspect of the federal government, the growth of spending, so we have to tackle the growth of spending, especially the issue of social security, which is urgent and needs to be addressed – – Not only for the tax issue, but also for social justice, in order to eliminate the privileges of the system we have, he said.

"The message of the document is clear: the focus is on spending. the document is clear, and the primary surplus trajectories allow for this reduction in spending, and the surplus will be reached again gradually, but we are proposing alternatives on the revenue side. "

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