July 24, 2020


1. Government delivers plan to unify taxes with a 12% flat rate

Economy Minister Paulo Guedes presented the first phase of the administration’s tax reform to Congress. The bill combines PIS and COFINS into CBS (Contribution on Goods and Services), at a 12% rate, except for financial institutions and other sectors of the economy that are protected by law. For banks, the tax rate will stand at 5.8%. According to the bill, municipal public transport services, health services provided to the public health system, real estate sales to individuals, religious temples, workers’ unions and political parties are exempt from the new tax. With CBS, companies will only pay a tax on the value added to the product or service. Individuals will not pay the tax directly. Exporters will be reimbursed for the amount of taxes paid. Companies will be eligible for compensation from eventual tax credits generated by CBS operations every three months. The second phase of the tax reform aims to change the Tax on Industrialized Products (IPI), which is higher for alcoholic drinks and cigarettes. Additionally, there will be changes in the income tax for individuals and companies, taxing dividends. Exemptions in salaries are expected to be part of the last phase of the reform. All stages have to be approved by Congress before coming into effect. 

Valor Econômico: Proposta do governo unifica PIS e Cofins com alíquota de 12%
Folha de S.Paulo: Unificação de tributos mantém benefícios aos bancos
O Estado de S. Paulo: Novo imposto deve se tornar o maior do mundo
Folha de S.Paulo: Entenda as quatro etapas da reforma

2. Central Bank president indicates economic recovery

Central Bank President Roberto Campos Neto said that the country is showing signs of a V-shaped economic recovery. According to Neto, who participated in a live stream with financial newspaper Valor Econômico, one of the reasons for this perception is a growing credit. “We have made great efforts so that lines of credit continue to work,” he said. The economist said that although there are signs of recovery, economic growth might not follow a complete recovery trajectory, as the country had experienced an “abrupt and rapid” drop in economic activities. He says that the first movements toward recovery are usually the fastest. Campos Neto also mentioned the aversion to risk in developing and developed countries, which are already operating as they were in January and doing even better than before. According to Ilan Goldfajn, President of the Director’s Board of Credit Suisse in Brazil and former President of the Central Bank, the results from the first half of the year indicate a recession, but there are signs of improvement. He says that the most important thing is to verify the speed and sustainability of the recovery.

Valor Econômico: BC sinaliza início de retomada em “V”

3. Expenses have increased for 60% of Brazilian families, according to poll

A poll by Instituto Ipsos shows that 60% of Brazilian families have experienced an increase in expenses during the pandemic, mostly due to social isolation. In 15 other countries, the institute registered the same percentage. This is especially because of domestic expenses such as groceries, medicines and utilities. “If we look at inflation rates over the past three months, they are low, under control and below the government’s target. But this does not affect people’s perception of costs,” says Ipsos president Marcos Calliari. According to him, there has been a migration in expenses that were made outside of the home and are now being made from within. Increases in utility expenses such as electricity, gas and internet, for example, have affected family budgets. When it came to taxes, the people interviewed saw very little difference. Calliari said that in a different poll nearly 70% of people said that they are not comfortable with going back to work or with the economy reopening. “Brazilians are, by far, the ones who are the least comfortable in comparison to other countries we polled,” he said. Brazilians also feel the risks of the coronavirus more intensely: 41% of people interviewed have said that they feel anxious. Among women, this percentage is 49%.

Valor Econômico: Gastos aumentam para 60% das famílias, diz Ipsos

4. Auditing reveals the Ministry of Health used only 1/3 of the COVID-19 budget

An audit by the Federal Court of Accounts reveals that the Ministry of Health used only 29% of the emergency budget made available in the fight against the coronavirus. The amount was made available in March. According to the report, out of the R$ 38.9 billion (USD $7.48 billion) made available, only R$ 11.4 billion (USD $2.1 billion) had been used as of June 25th. During this period, states have received 39% of the amount and cities received 36% of what they had been promised. The low rate of money distribution led to an inquiry by the Federal Public Prosecutor’s Office. Court of Accounts’ auditors want the Ministry of Health to present and justify their criteria for buying materials and services to fight the disease in the country, especially with regards to buying personal protective equipment, ventilators and testing supplies, as well as renting ICU vacancies. According to the Court of Accounts, only R$ 1.3 billion (USD $249.9 million) was used out of the R$ 11.4 billion. The Ministry said that they are facing challenges in acquiring materials due to the high demand for products all over the world, and that they have distributed resources and purchased equipment, materials and supplies to “ensure the integrity of the public health system and its ability to care for and provide assistance to the people.”

Folha de S.Paulo: TCU aponta baixo uso de verba contra Covid
G1: Acompanhe notícias sobre a pandemia
IRRD Covid-19: Veja o mapeamento de casos no Brasil e no mundo

5. Infected with the coronavirus, Bolsonaro walks around without a mask and talks to people on the street

Yesterday, President Jair Bolsonaro, who has the coronavirus, was photographed in the external area of the presidential residence without a mask, driving a motorcycle around and talking to people responsible for cleaning the streets. The president tested positive for COVID-19 a third time. Since July 7th, when it was confirmed that he had contracted the virus, Bolsonaro had been in isolation and was not making public appearances. The administration did not discuss the president’s behavior yesterday, According to the administration, he “continues to recover.” The coronavirus pandemic continues to break records in the daily number of deaths. On Wednesday, 65,339 new cases were registered in 24 hours, a record in the country. The number of deaths continues to be over 1,000 per day. Brazil has registered over 84,000 deaths and 2.3 million confirmed cases of the disease. The country has a rate of 39.6 deaths per 100,000 inhabitants. The United States, which has the largest number of deaths, and the United Kingdom are still ahead of Brazil in this regard, suffering its effects earlier. Their death rates per 100,000 inhabitants are 43.7 and 68.6 respectively.

G1: Com coronavírus, Bolsonaro passeia sem máscara
Folha de S.Paulo: Presidente testa positivo para Covid pela 3ª vez
Folha de S.Paulo: Brasil tem novo recorde de casos da doença
O Estado S. Paulo: Brasil tem média diária de 1.055 mortes pelo coronavírus