Lula Da Silva’s government backtracked on a measure that had generated concern among Brazilian soybean producers, who compared it to Argentine withholdings. This is Provisional Measure 1227 (MP), which modified the use made of tax credits generated by the payment of taxes. The Government’s justification was that the resolution sought correct distortions in the national tax system without increasing taxes.
Brazilian soybean producers grouped in Aprosoja welcomed the change in the decision but warned that the initially proposed measure is a bad sign. “Already was starting to hurt companies’ cash flow, generating a very high risk of unemployment, reduced investment and increased inflation. In the case of agribusinesses that acquire, process and export grains, the MP violates the export tax immunity guaranteed by the Kandir Law. And this loss of profitability of the industry was already being transferred to cereal producers,” they stated.
Despite the retreat of the Lula Government, the soybean farmers assured that “there are not many reasons to celebrate.” “By issuing a Provisional Measure, which came into force when it was issued, on June 4, and took the entire productive sector by surprise, The government caused an important political rupture within the discussion of the Tax Reform. How is the sector going to trust the proposals of a government that says it will work for the non-cumulative nature of the credits for the rapid return of these credits and, subsequently, issues a Provisional Measure to the contrary?”, they warned from Aprosoja.
Then they added: “It will be a very difficult task to reverse this abuse of trust generated by the publication of the MP. In this sense, it will be up to the government to sit at the table to negotiate with the productive sector and act differently than it has been doing until now.” “This inappropriate measure was adopted under the justification of increasing federal revenues. However, the real problem, which is controlling high public spending, has not yet been put into practice.”
