Last Tuesday, the 28th, the Minister of Economy, Paulo Guedes, spoke once again about resetting the IPI. In this case, the speech took place at the Panel Telebrasil 2022 event, in which the minister gave the opening speech. In his speech, Guedes assured that the end of the IPI is in Brazil's economic plans, and highlighted the measures that the country has taken to reach this goal. But what exactly does this mean? tax and what would its end entail? Understand once and for all!
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The acronym IPI indicates the Tax on Industrialized Products, which works as a tax for the sale of electrical appliances, electronics and many other products. In practice, this tax can influence, mainly, the sale of technology items here in Brazil.
In Guedes' speech to the Telebrasil Panel, the minister emphasized that the tax is one of the main factors responsible for the deindustrialization of the country. After all, higher prices influence consumer purchase decision-making. In this sense, the speech goes against a series of reductions that the Federal Government has made on the tribute. Including, the speech around zeroing the IPI is not new, but a campaign promise by President Jair Bolsonaro (PL). For most Brazilians, the reduction contributed to the decrease in the price of imported products, such as videogames.
End of IPI can help increase productivity
One of the reasons that support the agenda for the end of the IPI is precisely the possibility of increasing productivity. According to Guedes, Brazil is still one of the countries with the most closed economy in the world, which greatly harms negotiations with foreign countries. Indeed, this would be one of the causes of what some theorists call the deindustrialization of contemporary Brazil. Briefly, this concerns the fact that the country does not attract foreign investors, and one of the reasons would be the payment of high taxation.
On the other hand, the end of the IPI could have consequences for the largest electronics manufacturing hub in Brazil, which is the Manaus Free Trade Zone. This is because this hub is tax-exempt, which helps maintain productivity. However, according to Guedes, the government's interest is to make a smooth transition to the end of the tax, so that it does not harm the Free Zone.