Government implements tax reduction on cars of up to R$ 120,000; Vehicles can drop up to 10.5%
The announcement was made by Alckmin after a meeting with President Luiz Inácio Lula da Silva, Finance Minister Fernando Haddad, and representatives of the automobile industry.
Photo Reproduction / Fabio Rodrigues-Pozzebom /Agency Brazil
The Brazilian government announced this Thursday (25) a stimulus program aimed at Tax reduction on cars of up to R$ 120,000, as a way to stimulate the automotive sector, affected by the recent economic crises. The measure should result in a price drop of up to 10.5% on benefited vehicles. According to the government, the objective is to encourage the consumption and production of vehicles in the country, thus generating jobs and income. The tax reduction should be temporary, valid until the end of this year.
At proposal
The measures were announced after a meeting at the Planalto Palace involving the president Luiz Inacio Lula da Silva, or vice-president Geraldo Alckmin, an economic team of automotive industry representatives. One of the main measures adopted for the automotive industry is the reduction of taxes, including IPI, PIS and Cofins, for vehicles with a value of up to R$ 120 thousand. No changes were announced for vehicles with a value above this limit. Although the exact values have not been revealed, Alckmin said that the discount will be greater for vehicles of lesser value, making them more affordable.
"The stimulus proposal is transitory, anti-cyclical, for this moment of much idleness in the industry. [...] Today, the cheapest car is almost R$ 70 thousand", said the vice-president, who is also Minister of Development , Commerce, Industry and Services.
The Ministry of Economy will have a period of 15 days to adjust the decision according to tax regulations, which involves calculating the loss of revenue and establishing the compensation measures in the budget.
The automotive industry
The Auto Industry celebrated the measure, as it should provide an increase in sales and an improvement in the industry's driving prospects. The stimulus package for the industry includes the adoption of a referential rate (TR) as an interest rate applied to research and innovation projects, which will result in a reduction in costs for the sector in these specific fields. In addition, the National Development Bank Economic and Sustainable (BNDES) will provide a total of R$ 4 billion in financing in dollars, aimed at companies operating in the export sector. This measure aims to provide financial support to companies in this segment, recognizing their importance and encouraging their growth.
The government
Geraldo Alckmin, who holds the position of Minister of Development, Industry, Commerce and Services, led the development of a set of measures aimed at reducing the cost of popular engines. Currently, in Brazil, the initial value of a new car, without considering the measures announced this Thursday, is approximately R$ 68 thousand, which is equivalent to more than 50 minimum intervals, currently set at BRL 1,320.00. The intention to make vehicles more accessible was publicly expressed by President Lula in his speech on May 4, where he highlighted that a R$90,000 car cannot be considered popular.
In recent weeks, there have been discussions between ministerial and industry representatives on potential solutions aimed at lowering prices. During these conversations, the executives emphasized to the government that automakers already have a very low profit margin on popular cars, becoming demanding in reducing prices at factories. According to the companies, margins are higher in more expensive vehicles.
