Payroll reimbursement harms those who employ the most in SC, points out Facisc

The suspension of the law that guaranteed payroll relief for 17 sectors of the economy, on Thursday night (25), worries the Federation of Business Associations of Santa Catarina (Facisc). The entity’s president, Elson Otto, highlights that the decision by Minister Cristiano Zanin, of the Federal Supreme Court (STF), harms precisely those who employ the most.

In Santa Catarina, it especially affects sectors such as the clothing industry, which has been facing successive drops in production due to competition with Chinese products and pressure on production costs.

“The suspension of the exemption benefit will further harm the sector, which is labor intensive and will be affected by the increase in payroll costs”, assesses Otto.

The vice-president of Facisc Rita Conti, who works in the sector, adds that the measure worsens the sector’s competition scenario with Chinese products.

“We, in the clothing industry, already face unfair competition with products that come from abroad tax-free. The tax increase is yet another incentive for Brazilians to buy imported goods”, says the businesswoman.

Suspension of the law that guaranteed tax relief

The measure could even impact the recovery of industry in Santa Catarina, which after spending 21 months recording a drop in production accumulated over 12 months, managed to achieve its first monthly growth in February. Part of this result is due to the performance of the production of machinery and equipment, a sector that was included in the tax benefit.

Increase in informality – Study by the Facisc Intelligence and Strategy Center (CIE) points out that there is a risk of the decision affecting family consumption, due to the pass-through of increased production costs both in industry and in cargo transport, which was also benefited from payroll tax relief. “Family consumption is a crucial factor in maintaining the high level of sales (since 2022) in commerce and services”, details Elson Otto.

Also according to Facisc, the suspension of tax relief may also encourage informality in the economy, an important means of government revenue that influences the population’s quality of life.

Since 2012, the benefit of the lower tax rate on payroll tax relief has allowed 17 sectors, most of which are labor intensive, to pay rates ranging from 1.0% to 4.5% on gross revenue. The benefit had been extended by the National Congress until 2027.

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