Government approves new IPI cut; understand!

More industrialized products should become cheaper in the coming months. This is because the Government approved a new IPI cut. According to President Jair Bolsonaro (PL), his mandate intends to eliminate this tax to benefit consumers, but economists point to losses.

Read more: Products receive tax exemption and should get cheaper soon

New cut should lower product prices

The policy of IPI cuts was widely practiced by the Bolsonaro Government. It has even been stated several times that the intention is to eliminate the tax entirely so that consumers can benefit.

In this case, this new cut will affect more than 4 thousand different types of products, which will have a 35% reduction in the tax. Previously, other products had already benefited, such as video games, which even received full exemption from the tax.

In addition, the automobile sector also received a reduction in the IPI, which was previously 24.75% and is now 18%. With this, an even more significant increase in the final value of cars for Brazilians is expected. However, consumers complain that they have not yet felt the impact of the tax reduction on their pockets, while the expectation of cheaper products increases.

IPI cuts spark controversy

The main criticisms regarding the reduction of the IPI are the losses that the measure can generate for the Brazilian industry. This argument comes mainly from businessmen in the Manaus Free Trade Zone, as this region manufactures most of the country's electrical and electronic equipment with full IPI exemption.

In this way, the competitors of the factories in Manaus would have the advantage of being able to sell cheaper products with no change in profit. This would oblige Brazilian companies to manufacture and sell at an even lower price and would result in significant financial losses.

However, the Government claims not to change the IPI percentage for the same products that are manufactured in the Manaus Free Trade Zone. In response, businessmen claim that they already feel the losses of having other cheaper industrialized products and that this directly affects sales.