The president of the National Bank for Economic and Social Development (BNDES), Aloizio Mercadante, defended the reduction of the basic interest rate Selic and proposed an increase in taxes on bets. Fernando Haddad, Minister of Treasury, avoided controversy during the New Industry Brazil event, held this Monday (26).
The meeting brought together authorities to discuss national reindustrialization. In addition to Mercadante and Haddad, Vice President Geraldo Alckmin and Minister Gleisi Hoffmann also participated.
Understand what happened
Mercadante called for an immediate reduction in the Selic rate. “We will lower the Selic rate, because there is room to do so gradually, safely and sustainably”, said the president of BNDES. The base interest rate is currently at 14.75% per year, the highest level since 2006.
The president of BNDES also criticized the IOF (Tax on Financial Operations) for generating “monetary contraction”. According to him, this tax increases the cost of credit in the country. Contractionist policies aim to reduce the supply of money in the economy to control inflation.
Aloizio Mercadante added: “Selic generates debt. IOF generates revenue, reduces the problem of the debt-GDP ratio in sustainability. I am among those who (understand that) we need to look at structural expenses and compensate how we increase efficiency.”
Furthermore, Mercadante suggested increasing taxes on betting. In the view of the BNDES president, these platforms are “eroding people’s finances”. Therefore, by taxing them, it would be possible to “reduce, for example, the impact of the IOF and create alternatives”.
On the other hand, Haddad avoided commenting on changes to the IOF. During his speech, the Treasury Minister stated that “with the support of part of Congress”, the government is moving forward in stabilizing the budget. Consequently, it is creating “the macroeconomic conditions for the industry to develop again”.
Haddad also highlighted that the “greatest legacy” of the Lula government is the tax reform, scheduled to be implemented in 2027. However, he did not mention changes to the IOF or interest rates during his presentation.
Minister acknowledges high cost of Selic rate
Later, upon leaving the event, Haddad acknowledged that the Selic rate increases the cost of credit. “That doesn’t mean that businesspeople fail to understand the need for this measure”, the minister explained to journalists.
Furthermore, he stated that he wanted to resolve the situation “as soon as possible” so that taxation and interest rates return to “appropriate levels”.
During the event, Alckmin advocated changes to the Income Tax. The vice president argued that the 27.5% rate should only apply to incomes above R$100,000. Currently, this rate is applied to those who earn more than R$5,830.85.
Geraldo Alckmin explained: “How is this possible? (…) So let’s do justice, up to R$5,000 is exempt. From R$5 to R$7 there is a reduction. This is the logic of income tax, so that those who earn more pay more, and those who earn less pay less.”
Finally, Mercadante commented on the decline in the US share of global GDP. According to IMF data cited by the BNDES president, the United States reduced its share from 20.5% to 15% between 2000 and 2023. Meanwhile, China increased its share significantly in the same period.
“(The US) lost 5 percentage points of GDP in this 21st century. The European Union fell from 21.7% to 14.7%. China rose from 6.6% to 18.7%”, concluded Mercadante.
