On September 11, Marcos Cintra, the Special Secretary of Federal Revenue charged with studying the government’s tax reform proposal, handed in his resignation, followed by an official statement issued by the Ministry of Economy. Cintra is to be temporarily replaced by tax auditor Jose de Assis Ferraz Neto.
Although the official statement does not give the reasons for his resignation, it is believed that this is because Cintra disagreed about the need to include the financial transaction tax in the tax reform, having always openly defended the creation of the tax, which has been repeatedly rejected by Jair Bolsonaro.
Cintra believed that including the financial transaction tax would act as an alternative to the effect of payroll taxes, which in Brazil exceeds 40%, but the proposal had not been formalized by the government. Pending the submission of Bolsonaro’s proposal to Congress, Rodrigo Maia, president of the Chamber of Deputies, reported that the government’s idea of taxing transactions had prompted a “forceful” reaction from parliamentarians and that the measure would encounter “difficulties” in moving forwards in the Chamber.
The statement issued by the Economy Ministry clarifies that the government has not finalized any proposal for tax reform and that the economic team is working on formulating a new tax regime to “correct distortions, simplify the rules, reduce costs, alleviate the tax burden of families and alleviate the payroll”. In addition, it says that “the proposal will only be released after being approved by Minister Paulo Guedes and President Jair Bolsonaro.