Brazil will seek to simplify its tax code next year, Brazilian President Michel Temer said on Thursday, aiming to broaden his business-friendly reform agenda following proposals to modify the pension system and labor laws.
A government source familiar with the matter said that the reform could include streamlining the tax regime of the oil and gas industry, changes to levies on the financial system and the reduction of red tape in general.
Since taking office after the ouster of his predecessor Dilma Rousseff, Temer has pledged to pursue structural reforms to lift Brazil from its deepest economic recession in decades.
This month, the Brazilian Congress sanctioned his proposal to limit growth of public spending for the next 20 years, clearing the way for votes on other measures. Brazil’s generous pension system must be overhauled if the spending cap is to have real effect, officials said.
In a news conference in the capital Brasilia, Temer said he expects Congress to swiftly approve his plans to simplify the hiring of workers on temporary contracts, saying lawmakers have shown “strong support” for his agenda.
“Why not pursue tax reform now that plenty of bills have advanced?” Temer said, adding that his government would work hard to achieve the reform next year.
Economists have long criticized Brazil’s complex tax system as a barrier to long-term growth. Companies in Brazil spend on average 2,038 hours to do their taxes or about 12 times the average in the wealthy Organisation for Economic Co-operation and Development group of nations, according to the World Bank’s ease of doing business index.
Temer’s advisers have floated a proposal to unify the federal PIS (social contribution tax, payable by corporations, targeted to finance the payment of unemployment insurance and allowance for low paid workers) and Cofins taxes to fund social security. The government could also negotiate with states to unify an inter-state tax known as ICMS, a measure considered crucial to reduce legal uncertainties.
The official, who asked not to be named because he is not allowed to speak publicly, said that in addition to changes for the oil and financial sectors, the broad reform could include the restructuring of the Brazilian Ministry of Finance tax appeals tribunal, known as CARF.
“These are the general ideas of what should be done. It is still in embryonic stages,” the source said.
Despite Temer’s efforts at reform, unemployment has continued to increase. Data on Thursday showed the economy shed a net 116,747 jobs last month, more than double economists’ expectations.
Temer approved a modest increase of 6.4 percent in the national minimum wage to 937 Brazilian reals (US$288) on Thursday, reflecting a slowdown in inflation.
Temer also promised to support Congressional efforts to reform Brazil’s political framework, a messy multiparty system that critics say makes Brazil’s electoral politics complicated and often corrupt.
“The theme of political reform belongs to Congress, but we’ll incentivize it and support it,” he said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
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PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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