(Reuters) - Brazil will substantially increase income tax exemptions for individuals by the end of the current government's term and grant no tax breaks for companies lacking job commitments, President Luiz Inacio Lula da Silva said on Wednesday.
Speaking at an event in Sao Paulo commemorating Labor Day, a national holiday in the country, Lula reaffirmed his campaign promise to increase income tax exemptions for those earning up to 5,000 reais ($963) monthly.
"The word stands," he said, adding that this would be accomplished by 2026.
During the event, Lula also said there would be no tax breaks in Brazil "to benefit the wealthy" but for those "who work and depend on their salaries."
His remarks came after a Brazilian Supreme Court justice temporarily suspended a law extending payroll tax exemptions for 17 sectors of the economy, following a government request.
Lula, whose veto of the bill was overturned by lawmakers in December, said his administration provides tax relief for the poor but could not do so for companies that were not committing to creating jobs or securing positions for those already employed.
The president approved into law on Wednesday a change that had already been presented to Congress in February through an executive order, expanding the income tax exemption cap to those earning up to two minimum wages per month, or 2,824 reais ($544), up from 2,640 reais last year.
The move implied a 3 billion reais ($577.6 million) fiscal impact for this year, according to the Finance Ministry, underscoring the challenges the president may face in further boosting the exemption ceiling as promised, while his government struggles to balance the public accounts in 2024.
($1 = 5.1936 reais)