Government closes income tax and minimum wage adjustment proposals and expected to disclose after Carnival, sources say

The government has finalized proposals to readjust the income tax and minimum wage scale and is expected to announce the measures shortly after Carnival, sources familiar with the negotiations said on Monday.

Also on President Luiz Inacio Lula da Silva’s table is the Desenrola programme, for the renegotiation of the debts of low-income people, which could be announced sooner, the sources told Reuters.

Speaking at the PT’s national directorate meeting on Monday morning, Finance Minister Fernando Haddad told party members that the proposals are with the president for the final adjustments and that he decides when to make the announcement.

According to one of the sources, Lula has already indicated that he could announce Desenrola, one of his electoral promises, even before Carnival. The other initiatives, however, should be left for later.

As Reuters has already shown, the economic team is working on a proposal to raise the minimum wage to 1,320 reais, which would cost 5 billion reais a year. Initially reluctant to raise the minimum above the 1,302 reais in force since January, the economic team has started working with the higher figure determined by Lula, who promised a greater real income for workers during the election campaign.

The readjustment of the IR table should exempt those earning up to two minimum wages – or 2,340 reais from May. Lula’s campaign promise was to exempt wages of up to 5,000 reais, but the tax exemption would be too high at a time when the government is trying to cut spending and show fiscal discipline.

Source: Terra

Rose

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