Brazilian footwear workers celebrate renewal of tax exemption
Brazil’s Federal Senate has renewed a bill that allows 17 sectors, including footwear, to replace the payment of 20% social security contributions on employees' salaries with a rate ranging from 1% to 4% on gross revenue.
The rate for the footwear industry is 1.5%.
Haroldo Ferreira, president of Brazilian Association of Footwear Industries (Abicalçados), said: “We thank the chamber and the Federal Senate for advancing the project that has placed the best for Brazil above political and ideological issues.
“Now, the last step is the sanction of President Lula, which, we believe, will occur as soon as possible, so that companies can plan, grow and export more.”
A survey by Abicalçados showed the possible tax increase would add an extra tax burden of more than R$1 billion in two years for footwear companies. “We are a labour-intensive sector and 20% on the payroll is a very high cost. Taxing the creation of jobs is an insanity that should not take place in a country that wants to continue growing and generating jobs for its population,” said Mr Ferreira.
The footwear sector directly employs more than 300,000 people in Brazil and that a possible tax hike would lead to a 20% drop in footwear production and more than 10% fall in employment in two years.
The payroll tax exemption has been in force since 2011.
