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With tax reform, the cost of health plans could even decrease, Appy says


The Secretary rejects criticism that regulation would increase service costs; companies in the sector will be able to recover credits with administrative costs

BRASILIA – The extraordinary secretary of Tax reform From Ministry of Finance, Bernard Appyresponds to the criticisms leveled at the health plan taxation model, envisaged by the legislation sent to the Department Congress, could lead to an increase in prices. In an exclusive interview with Broadcast/Estadãothe economist states that the cost of these services could even decrease, because companies in the sector will benefit from the possibility of recovering credits with administrative costs, which does not happen today.

The first complementary bill regulating the constitutional amendment of the reform prevents employers from taking advantage of the tax credits generated by the purchase of health plans for their employees. In other words, companies will not be able to deduct the value added tax (VAT) paid in the previous stage of the chain.

The tax reform takes into account the principle of full non-cumulability, i.e. when a company collects a tax it generates a credit which will be recovered in the next phase of the production chain by another company. However, the purchase of health plans for employees has been classified in the draft regulation as indirect salary. Therefore in this case it will not be possible to use the credit.

«Conceptually it is correct to tax every form of indirect remuneration, because it is isonomic. If the worker is in a company that does not have a health plan and hires directly, or is a microentrepreneur who has a Simples company and hires the plan from a private, healthcare or even for his employees, he will pay taxes and will not receive no credit,” Appy says.



The secretary, however, does not agree with the assessment that this will increase the cost of health plans, which will be taxed at the margin. “We are discussing 2% of the value of the health plan, which is what would qualify the company for the credit (employer) within the model being designed. And I don’t see how to tax the plan except at the margin. I can’t imagine things could work any differently,” says the economist.

For Appy, the lack of possibility of this credit does not mean that the plans would be 2% more expensive. “The plan will recover credit for all of its administrative expenses. Today it recovers nothing, zero. All the expenses of the health plan with lawyers, accountants, rent, all of this will give it credit, and today not. So, it is entirely possible that the new model will result in lower taxation than the current one on health plans,” he argues.

“It is very likely that, with the tax reform, the cost of the health plan will reduce, and not increase”, adds the secretary, underlining that today health plans are already taxed with PIS/Cofins and ISS.

Basic basket

One point of disagreement between the Treasury, parliamentarians and some sectors, such as agri-food and supermarkets, is whether or not to increase the list of zero or reduced rate products in the basic basket.

“When you reduce taxation, this will not necessarily translate into a lower price for the consumer. This may result in a greater margin for those in the middle of the supply chain depending on the situation in which you tax,” says Appy, who advocates the cashback system because it guarantees that the tax paid will be returned to the families who made the payment.

Regarding the inclusion of meat in the zero rate, Appy reiterated that, according to the Treasury proposal, it will not be included. “Our proposal was to exclude it for several reasons. One obvious point is the effect this has on the standard rate, an increase of 0.6 percentage points. Another point is that on average in the country there is already a reduction of meat taxation. The topic will be discussed in Congress, but it has a cost to the rest of the economy,” he said.

Source: Terra

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