UPDATE 1-Brazil to lower tax burden as share of GDP, not in absolute terms -official | Reuters

Brazil’s government is committed to lowering the country’s tax burden as a share of its gross domestic product, but not necessarily in absolute terms, Productivity and Competition Secretary Carlos da Costa said on Thursday.

Speaking in a live event hosted by online media outlet Poder 360, da Costa said taxes would not be allowed to rise as fast as the rate of GDP growth, and added the government also wants to end certain payroll tax exemptions and reduce that tax load.

“This is our promise: to reduce the tax burden as a percentage of GDP. Not in absolute terms, but in relative terms. Brazil will grow (again), but taxes cannot grow at the same speed,” da Costa said.

The joint congressional committee on reforming Brazil’s complex and cumbersome tax system could draw up a draft of a bill in the first week of October, its chairman, Senator Roberto Rocha, said earlier this month.

Brazil’s tax load is currently around 36% of GDP, much higher than the average for developing countries. Economy Minister Paulo Guedes and others say it is a major reason why Brazilian business is unproductive, uncompetitive and expensive.

Da Costa said the so-called Brazil Cost of red tape, tax and regulation is around 1.5 trillion reais ($285 billion) a year in Brazil, or 22% of GDP, relative to the average of Organisation for Economic Co-operation and Development countries.

He said he was open to the idea of introducing a “ceiling” on the tax burden as a share of GDP.

Brazil’s lower house speaker, Rodrigo Maia, has said he is confident Congress will approve tax reform and that it should be done this year to avoid the debate from being influenced by the 2022 presidential election. ($1 = 5.25 reais) (Reporting by Marcela Ayres and Jamie McGeever in Brasilia Editing by Sandra Maler and Matthew Lewis)

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