“I’m against this policy”, says Campo Neto about exemptions

The president of the BC (Central Bank), Roberto Campos Neto, criticized the exemptions in an interview with CNN Brazil this Tuesday (April 30, 2024). The economist said that, generally, it is “against this type of policy”.

“Exemptions are bad. They generate a misallocation of resources in the economy. I am in favor of thinking about eliminating it, even if some sectors need to do it in a phased manner, of thinking about not having exemptions, but a more uniform policy, which better distributes resources”he stated.

Campos Neto recalled having been against the fuel tax exemption, implemented by the government of former president Jair Bolsonaro (PL) and reintroduced by Luiz Inácio Lula da Silva (PT). He indirectly mentioned the payroll tax relief for 17 sectors of the economy.

“As you divest along the way, you improve in the short term, but what you get back in the long term is less than what you lost. It’s as if you sold lunch to buy half of dinner because along the way there was a disinvestment process generated by this temptation, sometimes, to lower a price in the short term”he declared.

Last week, the economic team led by Minister Fernando Haddad took the exemption to the STF (Federal Supreme Court) through the AGU (General Attorney’s Office) to try to overturn the measure.

Minister Cristiano Zanin overturned sections of the law. There are 5 votes to maintain the decision. Luiz Fux asked for a review (more time for analysis) and paused the trial.

TAX REFORM

During the interview, Campos Neto also positively evaluated the tax reform. The president of the monetary authority stated that the measure simplifies and removes distortions, which helps the national economic scenario.

Haddad delivered the main text to regulate the change on Wednesday (April 24).

“It’s a very difficult reform”, he said, citing the time it took for the text to be promulgated by the National Congress. It was about 30 years.

“I think the reform is good. You will never achieve the ideal world, now in this initial phase of regulation I agree that, in fact, there are uncertainties”he completed.