Brazil: Unpopular Payroll Tax Restored

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By Ed Taylor

Efforts by the Brazilian government to end a costly truckers strike have resulted in the return of an unpopular payroll tax eliminated seven years ago.

The government and Brazil's congress on May 23 took steps to induce striking truck drivers to end their three-day blockade of highways that has resulted in shortages throughout the country.

The lower house of congress approved a bill eliminating two federal taxes on diesel fuel in an attempt to meet the truckers' demand. To compensate for revenue that will be lost due to this change, the house approved a bill ending a payroll tax reduction for 28 business sectors. Another 28 sectors will have this tax break eliminated in 2021.

In 2011, the government allowed these 56 sectors to replace a 20 percent payroll tax with a 1 percent to 3 percent tax on gross revenues. The bill restoring the payroll tax had been sent to congress last year by the government as part of its strategy to reduce a fiscal deficit.

The payroll tax is opposed by business associations, and the bill had been stalled in congress prior to the truckers strike.

To contact the reporter on this story: Ed Taylor in Rio de Janeiro at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

For more information on Brazilian HR law and regulation, see the Brazil primer.

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