Businesspeople criticize Zanin’s decision to suspend payroll tax relief

A decision by minister Cristiano Zanin in granting an injunction to suspend the payroll tax exemption for 17 sectors of the economy displeased businesspeople in the sector. Zanin responded to a request from the Lula government against the law approved by Congress that extended the tax exemption until 2027.

Businesspeople fear that the decision will worsen the situation of legal uncertainty in Brazil and impact the maintenance of jobs and the price of tariffs.

“Construction works with production cycles and long-term planning. It is harmful for the sector that a project is started considering a form of contribution and that, in the middle of the process, (the company) needs to consider a new format”, reacted Renato Correia, president of the Brazilian Chamber of the Construction Industry (CBIC), in note.

For the president of the Brazilian Association of the Textile and Clothing Industry (Abit), Fernando Pimentel, the issue of exemption had already been resolved by the National Congress and the injunction puts the financial health of the sectors involved at risk, in addition to threatening the maintenance of jobs in the sector.

“If we consider having several rounds of what has already been decided by Congress, we will have a problem. Companies, based on the enactment of the law, have already planned, hired people, priced their products and changed their export contracts. We need an environment that favors the hiring and preservation of jobs, and for this it is necessary to reduce the cost of labor”, says Pimentel to the newspaper The globe.

The Federation of Passenger Transport Companies of the State of São Paulo (Fetpesp) claims to have received the decision with “deep indignation”, and reinforced that the injunction is “contrary to the preservation of jobs in the country”.

According to the federation, “companies in the sector are still recovering from the losses caused by the pandemic, when the movement of people was restricted.” He also warned that the decision will impact the price of bus tickets.

The minister’s injunction is provisional in nature and will be analyzed by the other ministers in the virtual plenary. The session will start at midnight this Friday (26th) and run until May 6th.

The extension of the payroll tax exemption for 17 sectors and for municipalities with up to 156 thousand inhabitants was approved by Congress last year. However, Lula vetoed the initiative. Subsequently, the presidential veto was overturned by parliamentarians.

In the action presented by the Attorney General’s Office (AGU), the government argued that the measures, approved by Congress in 2023, did not have adequate demonstration of the financial impact, as required by the Constitution, the Fiscal Responsibility Law (LRF) and the Budget Guidelines Law. The petition was signed by Lula and the Union’s attorney general, Jorge Messias.