73 million people would be entitled to the tax ‘cashback’ proposed in the tax reform, says Finance Secretary | Economy

Around 73 million people would be entitled to the so-called “cashback”, the refund of the tax paid, which is being proposed by the economic team and the states in the tax reform regulations.

The information was released by the program director of the Extraordinary Secretariat for Tax Reform of the Ministry of Finance, Rodrigo Orais, this Thursday (25). “We are talking about more than half of the families where Brazilian children are,” he added.

According to the government’s proposal, tax refunds will be allocated to families with a per capita income of up to half the minimum wage for the population registered in the federal government’s Single Registry (CadUnico).

According to the proposal, there will be a refund of:

• 100% of the tax paid in the case of CBS (federal VAT) and 20% for IBS (state and municipal VAT), in the case of cooking gas
• 50% for CBS and 20% for IBS, in the case of electricity, water and sewage;
• 20% for CBS and IBS, in other cases.

“Federal autonomy is preserved by providing that entities may, by specific law, set higher percentages for the return of their portion of CBS or IBS (not exceeding 100%)”, says the proposal.

The proposed constitutional amendment for tax reform on consumption was approved at the end of last year, and promulgated by the National Congress.

In the text, important points, such as the end of cumulativity, the collection of taxes at destination, simplification and the end of distortions in the economy (such as invoices and tax charged “from the inside”) have already been assured.

However, several sensitive topics were postponed until 2024, as the text of the PEC indicates the need to regulate some matters through bills. This is what the government began sending to the Legislature this week.

This first tax reform regulatory project has around 300 pages, 500 articles and several annexes. In addition, it also has eight pages dealing only with the repeal of current rules that will be abolished in the future.

In addition to this project, he said, there will be two others:

• one on the transition in revenue distribution (to states and municipalities) and with issues related to administrative litigation;
• one to deal with transfers of resources to regional development funds and compensation for state losses.

The Treasury’s schedule predicts that the regulation will be carried out between 2024 and 2025. With the end of this phase, the transition from current taxes to the Value Added Tax (VAT) model could begin in 2026 — with no charge cumulative.