LatinNews Daily - 19 March 2025

*Brazil’s President Luiz Inácio Lula da Silva has submitted a bill to congress that proposes tax exemptions for lower earners. The legislation seeks to revise the salary bands for income tax (IR) and grant full IR exemptions for taxpayers who earn less than R$5,000 (US$882) per month and tax reductions for people with a monthly income of between R$5,000-7,000. Currently only taxpayers with a monthly income of up to R$2,259.20 are eligible for an IR exemption. The government estimates that, if the bill is approved, around 90m citizens (90% of people who pay IR) would be granted a tax exemption or reduction and over 26m individuals (65% of IR taxpayers) would be eligible for the full exemption. Brazil’s finance ministry estimates that the income tax reform would cost R$27bn in tax revenue, so the bill proposes increasing the tax burden on higher earners to compensate for the projected shortfall. Finance Minister Fernando Haddad said yesterday that income tax would be increased for the wealthiest 0.13% of the country (141,400 taxpayers), those who have an annual income of more than R$600,000. The government’s proposed IR reform could shore up public approval among lower-income voters and among Lula’s core left-wing support base, but it is uncertain whether the bill will receive strong support in congress. The centre-right president of the lower house, Hugo Motta, suggested yesterday that the bill would be amended by lawmakers.