Business

Government will zero import tax on steel and 10 more products

BRASÍLIA – With the scenario of high inflationthe government prepares a measure to bring the tax rate to zero Import tax of 11 products, including steel. The cut should be announced next Thursday, 11th, and includes products from the basic food basket and civil construction, according to the Estadão/Broadcast with accredited sources who participated in the preparation of the proposal.

Also on Thursday, the government may announce a new general reduction of 10% in the Common External Tariff (TEC) of the Mercosurwhich would affect almost all Brazilian imports, leaving out a few sectors, such as automobiles and sugar cane.

as anticipated the Estadão/Broadcastthe idea is, in the absence of the other countries that make up the group, to make a new cut in the rates charged for the purchase of products from outside the bloc, as was done at the end of last year.

The Minister of Economy, Paulo Guedes, has a meeting scheduled for this Tuesday, 10th, with representatives of the steel industry. The expectation is that they should speak out against the government’s proposal to eliminate the import tax.

With the measures, the government wants to give a “supply shock” by reducing the cost of importing various items, which would contribute to forcing down domestic industry prices. The 11 that will be zeroed are products that weigh heavily on Brazilians’ pockets and have helped to increase inflation.

The assessment is that the reduction of the tax for imported products can be done without harming the national industry, since the President’s decree Jair Bolsonaro expanded the reduction of the Tax on Industrialized Products (IPI) from 25% to 35%. Last week, however, the minister Alexandre de Moraesof Federal Supreme Court (STF)partially suspended the measure for industrialized products in the rest of Brazil that compete with those manufactured in free zone.

Cut

The import tax reduction for the 11 items has to go through the Foreign Trade Chamber (Camex)a group that brings together representatives from various ministries, in addition to the Presidency.

In March, the government adopted a similar measure by eliminating taxes on imports of ethanol, some foods and IT and capital goods by the end of the year. At the time, the tax waiver calculated by the Ministry of Economy was BRL 1 billion.

In the case of food, the items of the basic basket with the highest weight in the INPC, coffee (which was 9%), margarine (10.8%), cheese (29%), macaroni (14%), sugar (16 %) and soybean oil (9%). The tax on ethanol, which was 18%, was also zeroed.

Mercosur

In addition to zeroing the tax for the 11 products, the Brazilian government is also studying a new reduction in the tariffs charged for imports from outside Mercosur. Under the bloc’s rules, Brazil, Argentina, Paraguay and Uruguay charge the same import rate – the Common External Tariff (TEC) – except for negotiated exceptions.

After trying to get the whole block to lower the rates in general, without success, the Brazil decided to make the move unilaterally last year.

In November, the Ministries of Economy and foreign affairs announced a 10% reduction in the tariffs of 87% of the trade tariff, keeping out goods such as automobiles and sugar-alcohol, which already have a different treatment by the bloc.

Under Mercosur rules, the TEC could only be changed by common agreement between the four countries. But Brazil must, once again, resort to a device that allows the adoption of measures aimed at “protecting people’s lives and health”.

In November, the Brazilian government justified the measure after the rise in prices generated by the coronavirus pandemic. Now, the justification is the war in Eastern Europe for the increase in inflation, which would allow the cutting of tariffs.

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