System remains unchanged in 2024; reencumbrance will be gradually increased until 2028, when the rate of 20% will be charged
After reaching an agreement with the National Congress, the federal government already has a proposal with a middle ground to resolve the impasse involving payroll relief for 17 sectors of the economy.
The Minister of Finance, Fernando Haddad, said this Thursday (May 9, 2024) that it will work on a gradual scheme to resume the collection of social security taxes, increasing the rate charged by 5 percentage points each year on the payroll. Here’s what it will be like:
The total payroll tax exemption, which will end gradually, allows the benefiting sectors to pay rates of 1% to 4.5% on gross revenue instead of 20% on the payroll.
The model proposed by the government is hybrid. While the charge on revenue decreases, the tax on salaries increases each year.
There is a difference in the payroll collection of employees’ 13th salary. According to Haddad, this remuneration will be exempt until 2028. He stated that it was a proposition from the sectors accepted by the government.
“The sectors presented a counterproposal, asking […] that the 13th sheet [salário] would only be reimbursed at the end of the process […] We will accept the counter-proposal from the sectors”he declared to journalists at the National Congress.
Releasing a sector means that it will have a reduction or exemption from taxes. In practice, it makes hiring and maintaining employees cheaper in companies. Defenders of the mechanism say that this type of practice heats up the economy and promotes job creation.
Deputies and senators, on several occasions, determined that the mechanism must be maintained. The government appealed to the STF (Supreme Federal Court) on April 24 to end the measure.
Minister Cristiano Zanin, appointed by Luiz Inácio Lula da Silva (PT), issued on April 25 an injunction favorable to what the President of the Republic wanted and suspended the exemption.
It was a move by the government to discuss the issue further with Congress. Lula himself has already said that the action in the STF on the issue was a strategy to force a negotiation.
The objective of the PT’s management in overturning, even partially, the payroll tax exemption is an attempt to increase revenue. Balancing public accounts is Minister Haddad’s main promise during his tenure at the head of the Treasury.
Haddad stated that the change to the gradual reinstatement system will be resolved with the Supreme Court itself. It will not need to go through Congress.
The government’s action in the STF also called for the end of the tax exemption for municipalities with up to 156.2 thousand inhabitants, considered smaller. The Finance Minister said that the discussion with the sector should begin on Monday (May 13). A middle ground is also expected.
Read below which are the 17 exempt sectors:
