IL’s proposal to amend the budget to create two taxable income brackets and two general marginal rates would lead to a loss of tax revenue of nearly three billion euros, UTAO calculates.
In the report delivered to parliament this Tuesday, the Technical Budget Support Unit (UTAO) estimates that the IL’s proposed amendment to the state budget for 2023 (OE2023) would lead to a loss of IRS revenue, on the continent, of “about” 2.9 billion euros, “about 22.8%”.
At stake is the Liberal Initiative (IL) proposal, which will be voted on this Wednesday, which would merge the first five tiers and the last 4 tiers, creating a two-tier system, with the maximum level changes from the first level compared to the maximum level of the fifth step in the National Budget proposal, increasing from 26,355 euros to 26,665 euros.
In the simulation, UTAO uses the 2020 IRS campaign, assuming the amount of deductions for collection remains unchanged.
The technicians supporting the members of the Budget and Finance Committee (COF) also simulated two alternative scenarios.
In case the taxpayer can’t “enjoy all the tax deductions they actually had in 2020 (thanks to the IRS collected in response to the IL proposal)”then the loss of IRS revenue will be less than estimated in the central scenario.
“With a 2% (5%) loss in the amount of deductions that can be deducted from the collection, the reduction in IRS income will be approximately 22.1% (21.2%)”can be read in the analysis.
On the other hand, “if taxpayers are at the lower limits of the ranges (and not at the upper limits, as assumed in the central scenario), the greater the loss of IRS revenue, as more taxpayers will benefit from the statutory marginal rate of 14.5% “.
“In this alternative scenario, the settled IRS will fall 26% from 2020 calculated earnings with then-current IRS rules. It will fall 23.9% from actual exercise”he adds.
In the proposal, IL justifies that following discussion of the state budget for 2022, in which it proposed a single rate only for the current five lowest tiers and countered that there would be a domino effect that would also benefit people with higher incomes long, made custom changes.
“In this new proposal, the Liberal Initiative takes this argument into account and reorganizes the levels in such a way that there remains an advantage for incomes falling in the lowest levels, but that this advantage is gradually reduced until it becomes zero.” in the incomes included in the last step”he says, adding that in addition “this adjustment will also reduce the budgetary impact of the revenue decline”🇧🇷
As part of the discussion and vote on proposals to amend the budget, the parties may ask UTAO to analyze measures, in particular on budgetary impact.
Source: DN
