Construction material to have IPI zeroed
O Estado de S. Paulo - 01/28/2009
The Government studies the possibility of reducing to zero the tax rate of the Excise Tax (IPI, in Portuguese) for the building materials. Currently, most materials pay a 5% tax. Should the measure comprise all items, the tax collection will fall by R$ 1.1 billion (US$ 478.3 million). Technicians analyze if there are conditions to do such "kindness". It is possible that the release may fall only upon the main products, depending on the income projections for this year. Another tax cut under discussion is the reduction, from 7% to 6%, of the tax rate charged on the affected assets of the building companies. When they erect a building, land developers set aside the accounting for that undertaking. There is a tax rate of 7% over the sale of the building that covers all the federal taxes. The private sector has been asking for the reduction to 6%, in order to make the assessment similar to that of the companies that calculate their taxes based on the system of assumed profit. Such measure, if adopted, would mean a tax waiver of nearly R$ 150 million (US$ 65.2 million). The package will also provide for a mechanism through which the borrowers with an income of up to five minimum salaries which are good payers are exempted from the payment of up to 16 installments. That will be made possible by the Guarantee Fund to be created. The purpose of this Fund is to reduce losses from possible "defaults". The objective is to make the financing cost cheaper, since the final interest includes a risk rate. The Guarantee Fund will also stimulate the participation of private banks in the loans for this range of income. The package will also raise the limit of the value for the real estates covered by the Financial Housing System (SFH, in Portuguese), which is R$ 350 thousand (US$ 152.2 thousand). The new limit should be R$ 500 thousand (US$ 217.4 thousand).