The government links the value to the tax on profits

The determination of the average value of the new Bolsa Família will depend on the direction of repair Income tax in the National Congress.

The government adopted as a strategy to use the revenue generated from measures such as taxation of profits and dividends to serve as a permanent source of financing for the expansion of the social programme.

Therefore, the eventual reduction in the proposed rate, from 20% to 15%, as wanted by business and members of Congress, could affect the average amount that must be paid to beneficiaries, according to government sources consulted by Estadão/Broadcast.

Linking one measure to another was a “government decision” given the assessment that IR reform should be “pushed forward” for approval.

Although some proposals are popular, such as correcting the IRPF schedule, others still encounter resistance and could hit the lobby of companies and classes that currently pay lower taxes under “contempt”.

The value of the new program, which will be Bolsonaro’s government’s social label, will be determined based on the IR reform and stagnant spending cap for 2022, the rule that limits the payment of expenditures to inflation.

President Jair Bolsonaro (No party) announced that the new Bolsa Família will pay an average of R$300, on top of R$250 previously negotiated within the government.

Then, Senator Flavio Bolsonaro Patriota-RJ, the president’s son, said the value would be an average of R$270 – in a statement that sought to “correct course,” according to government sources.

The new Bolsa should be launched this year so that it does not clash with the election law, which prohibits this type of action in an election year, in the case of 2022.

For this, the government has to comply with the requirements of the LRF (Financial Responsibility Act), which requires offsetting permanent revenue to meet permanent expenditures, such as the new social policy.

The government was working on a supplementary bill to remove these provisions and create an exception for the new Bolsa Família. But the idea of ​​restricting revenue from measures such as taxing profits and dividends prevailed.

According to a government source, “Since tax reform needs to be pushed forward, it was chosen this way.”

One member of the economic team says that since money has no “stamp”, taxes on profits and dividends will be used to fund Bolsa’s expansion, while the other part of the reform will be offset by the structural increase in the group.

The strategy is considered risky by teams involved in the discussions, as changes made by Congress could limit the program. Another source acknowledges that a scenario of change without Plan B could jeopardize the scope of the new policy.

The economic team is betting on this “dilemma” to make the proposed change in income tax.

Connecting the two measures would expose Congress’ choice: To limit taxes on profits and dividends and to meet the demands of corporations and groups such as lawyers, physicians, and other professionals who act as a legal entity, lawmakers would jeopardize a higher value of benefits to the most vulnerable sections of the population.

The same reasoning applies to the end of interest on equity, taxes on the outflow of exclusive mutual funds and the end of the exemption for individuals who invest in REITs.