Currently, under the tax reform proposal that is still in the National Congress, there is a forecast for a model that will refund the tax paid – in practice, a cashback, as adopted by some retail platforms.
According to the text – which is still under discussion in parliament – the tax refund this may work for those in single register (CadÚnico) paid in basic basket purchases.
According to government figures, the measure could benefit around 25 million families.
At a public hearing in mid-March, economist and finance ministry secretary Bernard Appy stressed that he was defending the measure in conjunction with a re-cluttering of items in the basket.
According to the economist, it would be “more just” to carry out this type of policy to the detriment of an outright tax cut.
“Together with the people registered in the Single Register of Social Programs in Brazil, this represents 35% of the Brazilian population. It could be the target audience, it could be another one. It has to be defined politically by the parliament, to whom you will return this tax,” he said.
The mechanism in question, it should be remembered, is already provided for in a report presented by MP Aguinaldo Ribeiro (PP-PB) in mid-May 2021.
How Tax Cashback will work
With the text of the tax reform still under discussion, there is no predictability as to how the tax will be returned to taxpayers.
According to Appy, the automatic tax return, via the CPF, is the easiest way, despite some obstacles.
The measures which provide for a return a few days after purchase were criticized by some MPs during the public hearing, noting that they would end up limiting the purchasing power of low-income families in the short term.
“If you’re going to return it within 15 days, whatever the delay, the poor Brazilian will be the only one in the world who needs working capital. Have you thought? He will pay in advance to receive later. It makes no sense,” said MP Mauro Benevides Filho (PDT-CE).
“Haven’t you ever bought something from the store and it gives you cashback? You buy, give the CPF and the credit goes to your account. It has to be automatic, it can’t be in a month,” House tax reform task force coordinator Reginaldo Lopes (PT-MG) MP told Mariana London’s column. ‘UOL.
In other countries, tax-free systems are already in place – such as in Japan, where people with low purchasing power receive “cash back” on the purchase of larger consumer goods.
The measure, however, required government efforts for inspection.
In Canada, cash back works with a one-time tax, which in turn becomes a tax credit for low-income families.
This return of tax affects about 9 million people, or 25% of the population. In addition, per year, the return can reach 2,400 Canadian dollars per person.
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