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Companies fear that MP 1202 will increase hiring costs and harm competitiveness. Fiscal adjustment necessary for economic development.
A 1202 Provisional Measure has been the target of criticism from business entities, who claim that the measure increases the costs of employing in the country, which harms the competitiveness of Brazilian products and services both in the international market and in the Internal market. MP 1202/2023 has significant impacts on several sectors of the economy, leading to widespread dissatisfaction on the part of entities representing agriculture, commerce, industry, services and transport.
In addition to affecting the production sector of Brazilian products and services, the 1202 Provisional Measure it also raises concerns related to payroll repayment. Payroll repayment is a sensitive issue for business entities, who fear the effects that the measure will have on companies' employability and investment capacity.
Business entities repudiate MP 1202
In a note, the Brazilian Confederation of Agriculture and Livestock (CNA), National Confederation of Commerce of Goods, Services and Tourism (CNC), National Confederation of Industry (CNI) and the National Transport Confederation (CNT) express dissatisfaction with MP 1202. The measure reburdens the payroll of 17 sectors of the economy, limits the use of tax credits arising from final court decisions for the payment of federal taxes and reviews the Emergency Program of Resumption of the Events Sector (Perse).
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Economic impact of MP 1202
The president of the CNI, Ricardo Alban, recalls that, in the past, the preservation of employment was always preached. ‘It is obvious that the re-encumbrance of the payroll will result in increased prudence on the part of those who hire. When any sector of the economy starts to have 20% more in its charges, what will it do? The first step is to stop investing and then downsize until you understand the impact that this new and unexpected cost will have on your performance, because the sector will lose competitiveness', says the businessman.
Repercussion of MP 1202 on industry and commerce
According to the Confederations, MP 1202 further harms the competitiveness of industry and commerce, which face unequal competition with imports, especially with international electronic commerce, which does not pay the same taxes paid by productive setor national. The MP is considered mistaken in increasing the tax burden on the productive sector, the main generator of wealth and jobs that lead to economic development and socially sustainable.
MP 1202 harms the productive sector
The productive sector, represented by business entities in agriculture, commerce, industry, services and transport, received with surprise and nonconformity the measures to increase taxation announced at the end of 2023 and the way in which they were implemented, through the MP 1202, without prior dialogue with the entities and in opposition to positions recently taken by the National Congress.
Impact of MP 1202 on the productive sector
MP 1202 reinstates the payroll of 17 sectors of the economy, limits the use of tax credits arising from final court decisions for the payment of federal taxes and revises the Emergency Program for the Resumption of the Events Sector (Perse). All of these measures increase the tax burden that falls on the productive sector, the main and fundamental generator of wealth and jobs that lead to sustainable economic and social development.
MP 1202 and the decision of the National Congress
In addition to being mistaken from an economic point of view, MP 1202 annuls recent decisions by the National Congress, which twice in 2023 decided to maintain the payroll tax exemption, with the Presidency of the Republic's veto being overturned, in an unequivocal demonstration of the will policy.
Economic challenges amid MP 1202
Payroll increases increase the cost of employing in Brazil and further harm the competitiveness of industry and commerce, which already face unequal competition with imports, especially with international electronic commerce, which does not pay the same taxes paid by national productive sector. A situation that already imposes on us the need to legally question this mistake. And which, if reversed, will become a great opportunity to, at the same time, increase federal revenue and guarantee tax justice between national production and imports.
Fiscal adjustment and balance of public accounts
The productive sector understands the importance of seeking to adjust public accounts so that the economy can grow in a sustained manner. However, what we have observed is the increase in public sector expenses and the search for fiscal balance with the continuous increase in revenue. The burden of adjustment cannot fall solely on the productive sector. The public sector needs to make its contribution, reducing and making its spending more efficient. We hope that the government itself will reconsider sending MP 1202. And, if this is not the understanding, that the president of the National Congress can return the MP.
Entities representing the productive sector consider that dialogue is the only way for public policies to achieve their objectives. Economic growth and fiscal balance are objectives for the entire nation. To achieve them, everyone needs to participate in the search for convergence and understanding. The productive sector is committed to the economic and social development of Brazil.
Source: Industry Portal
