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Large Fortune Tax Bill approved by Senate Rapporteur

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Senator Major Olimpo (Photo: Reproduction / Senado Agency)

Senator Major Olimpo (PSL / SP) issued on Wednesday (25) a favorable report to the Bill to institute the Tax on Large Fortunes (IGF) in Brazil, but presented two amendments to the original proposal. One of them is for 50% of the amount collected to go to the National Health Fund (FNS). The bill is already on the Senate's agenda and is awaiting a date to be decided by this legislative house.

The proposal for Complementary Law 183 presented in August 2019 by Senator Plínio Valério (PSDB / AM) was approved by the report of Senator Major Olimpo under the argument that the Tax on Large Fortunes can help the country better face an economic crisis after the Coronavirus.

“From an economic point of view, Brazil, as well as the whole world, is going through a critical moment due to the Coronavirus pandemic, and the economic effects of it will be very high, still difficult to measure, and the institution of the IGF is fundamental and timely. at this moment".

Tax to save the country's health

The rapporteur argued that the Big Fortune Tax can help the country raise more. However, it submitted an amendment to the original project to insert a new article to the proposal with the objective of directing 100% of the amount collected to a certain destination and half of it will be health.

“The funds raised with the Tax on Large Fortunes (IGF) will have the following destination: 50% for the National Health Fund – FNS; 25% for the Worker Support Fund – FAT; III – 25% for the Fund to Combat and Eradicate Poverty. ”

This, however, was not the only suggestion to amend the project. Olimpo also mentioned that if the PL becomes law, after passing the approval in the Senate, analysis by the Chamber and the President of the Republic for veto purposes, the IGF should last “for a period of 2 (two) years, from its implementation".

According to Senator Plínio Valério mentioned in the justification of the project, PLC 183 aims to “institute the tax on large fortunes with few rates and equity ranges, with progressive incidence starting at twelve thousand times the monthly exemption limit of the progressive table of the Tax on the Income of Individuals (today, R $ 22,847,760.00) from equity ”.

IGF and the impossibility of evasion

The Tax on Large Fortunes is provided for in the Federal Constitution, but there is still a complementary law to establish rules on this type of tax. Since 1988, there has not even been a law to regulate this matter. The competence of instituting such a tax rests solely with the Union, and therefore no state or municipality can deal with this matter.

In this new project on this type of tax on the taxpayer's equity, the possibility of evasion is ruled out. In the proposal there is a provision of responsibility for those who collaborate for such practice:

“The at. 8 establishes the joint and several liability of the legal entity for the payment of the IGF whenever there is evidence that there is a transfer of assets to it with the objective of concealing the true owner of the assets and rights, with the purpose of avoiding taxation by the IGF ”.

Crossing data and increasing revenue

From this same perspective, therefore, the project's rapporteur mentioned that this possibility of evasion is minimal. He then pointed out in his analysis that the share of property taxes like the IPTU (Urban Property and Land Tax) and ITBI (Tax on the Transmission of Real Estate and Rights Related to Them) has increased considerably due to the crossing possible through new technologies.

The collection of these property taxes in Brazil, according to the senator, “increased from 3.55% in 2008 to 4.67% in 2016, when it corresponded to 1.51% of GDP, compared to a proportion of 1.21 % of GDP in 2008 ”. He stated that these are data presented by the Federal Revenue of Brazil (RFB).

The rapporteur explained, however, that despite this indicator, the RFB in the same studies pointed out that in comparison to other countries, Brazil was the one that collected less through direct taxes such as income tax and more collected in indirect calls, the which affect the products that the population purchases or contracted services.

“Among the same set of countries considered, in addition to taxing property relatively little, the Brazilian State was also the one that collected less on income, profit and capital gain (5.9% of GDP) and the second that most recorded the goods and services (15.8% of GDP) ”.

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