12/11/2008 11h03
Package wants to stimulate middle class consumption
Valor Econômico - 12/11/2008
Finance minister Guido Mantega announces today a set of initiatives to stimulate the consumption of goods and services in the economy. The package will be still submitted to the president Luiz Inácio Lula da Silva in the morning, but in it there will be the creation of new rates for the Withheld Income Tax; reduction of the Financial Operations Tax (IOF) for credit operations for consumption, whose rate was raised in January to 3.38%; and reduction of the Tax on Industrial Products (IPI) for automobiles. According to a suggestion of union workers who were with the minister yesterday, the reduction of the IPI, which is temporary, would be conditioned to the maintenance of jobs. The Ministry of Finance's proposal for the IR is to create two new rates, one below the current minimum one, of 15%, something around 10%, and another one 15% and the highest rate of 27.5%, which can be 22% or a little more, around 25%. The reduction of the IPI is an incentive for the automotive sector, which most suffers with the financial crisis that resulted in a strong contraction of the credit offer. The new round of disbursements from funds of the compulsory deposit of the banks in the Central Bank is not expected to be released today. There are doubts about the results of this measure since until now the CB released more than R$ 90 billion (US$ 39.1 billion) in compulsories that could activate the credit operations, but that is not happening. It is not also absolutely right and sure that the funds that the contributor will receive as a relief in the income tax will be used for consumption. There is the risk of this money becoming savings. Today president da Silva will have a meeting with a selected group of businesspeople and only after this meeting the measures will be announced by Mantega as a "Christmas gift" from the government, mainly to the middle class.
