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Brazilians Get Rid of Temporary Tax on Checks that Lasted 14 Years

Brazilian opposition senators celebrate victory Starting the new year Brazilians will have one less tax to pay. Concluding a seven-hour heated debate in the Brazilian senate, which went on up to the wee hours of this Thursday, December 13, the opposition defeated a Lula administration proposal to keep charging until 2011 a tax on checks and other financial transactions.

The check tax is known by the acronym of CPMF (Contribuição Provisória sobre Movimentação Financeira – Temporary Contribution on Financial Transactions).

All the government's maneuvers were not enough to get the three fifths majority the administration needed to keep the tax, which was created in 1993 to be a one-year stopgap measure to fund health programs.

The check tax was born as a 0.20% levy on financial transactions and four years later had that rate raised to 0.38%. The tribute was bringing about 38 billion Brazilian reais (US$ 21.54 billion) every year to the federal government's coffers.

Only about half of this money was being used by the Health Ministry. Social Security and poverty programs were getting part of the cash. This was Lula's worst defeat in Congress in the five years he is in power.

The proposal was rejected by 34 opposing votes. The government needed a minimum of 49 votes to guarantee this constitutional amendment, but received only 45 favorable votes.

Talking for the oppositions, Rodrigo Maia, the Rio de Janeiro representative who is the Democratas leader in the House, told reporters: "Brazil needed this. The government wasn't able to understand that the country is changing."

At the last minute the government tried to gain some votes even promising to use all the money collected for health programs. To no avail.

Senator Romero Jucá from Roraima, who is the government's leader in the senate proposed that the CPMF lasted only one more year, but his proposal was also rejected. In a last failed maneuver Jucá tried to postpone the final vote on the senate floor for another day.

The leader of the DEM party in the senate, José Agripino, from Rio Grande do Norte state, supported the end of the CPMF as a way to reduce the tax burden: "If the government says that without the CPMF the health sector will collapse it's because it intends to use the budget's surplus to fund public TV, to create offices and ministries, to promote an irresponsible lavishness by those who don't know how to rule."

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  • Show Comments (11)

  • João da Silva

    Ch.c
    [quote]Thank you so much for your compliments. In fact I am 57 years old. True. [/quote]

    I am surprised to know your age. One of the ways to stay young is to exercise oneÀ‚´s brain all the time especially manipulating with numbers and I have observed that you do this quite well. Wish you many many more years of life. Still I am curious about how you know so much on the Brazilian Economy and Politics. However, you don’t have to say, if you do not wish to.

    [quote]So much that he prefers to export agricultural products….instead of reducing hunger in his own fiefdom that Brazil is. [/quote]

    I too go ballistic on this issue. First, we have to feed our population and think on exports. Both can be done simultaneously with good planning. However, in our anxiety to earn foreign currency, we have forgotten about feeding our own citizens. This policy explains the absurd price increases of beef, poultry and dairy products at the retail outlets since January of this year.

    Regarding this CPMF , we all know that the money was NOT being used for the purpose it was created. Last year, I went for a consultation with a doctor (who declared that I was in good health), but he found it was interesting to chat with me. We were talking about this tax and to my surprise I came to know that he spent a few months in England studying NHS (National health Service) (and YES, he is a Brazilian which proves that NOT all the Brazilians are dumb!). He was good in numbers too and was explaining that with the money from CPMF, a high quality and free universal Health Care Service could easily set up in Brasil. But it depends on political will.

    Since you are 57 and have been keeping track of Brazil for a long time, you must remember that the real author of this idea of CPMF was Dr.Abib Jatene, a leading Cardiologist from SP. He served as a minister for a FEW MONTHS and quit in disgust.His intention was to set up a Health Care Service like that in U.K ., Canada, NZ, etc; However, he could not handle the politicos in Brasilia! Since 1993, ALL the governments have been paying lip service to health care, collecting this Tax with differing names and percentages and re-channeling for other purposes.

    That is the reason, I was pleased that the extension of CPMF was voted against. I know that they will come out with other taxes, but at least it was a wake up call. Also, Key board commandos like us played an important role by sending e-mail to the senators. It is a small victory for sane Brazilians.

  • ch.c.

    To Joao !!!!!
    “You know goddamn well that it was on ALL transactions”
    You see how they cheated on you….once more and as usual. They called it TAX on….. checks !!!!
    But a tax also “available” on non checks…of course !
    😀 😉 😀 😉 😀 😉

    “your intelligence in spite of your tender age”
    Thank you so much for your compliments. In fact I am 57 years old. True.

    😉 😀 😉 😀 😉 😀 😉

    “No, I did not elect nor reelect. I don’t applaud them either. You know it “
    I was not in your back during your vote. Smile.
    What is sure is that 60 % of Brazilians voted for HIM …….the Robin Hood of the riches.
    Yesssss…Bin Lula is the only Robin Hood on earth taking from the poors and giving to the riches.
    So much that he prefers to export agricultural products….instead of reducing hunger in his own fiefdom that Brazil is.

    😮 😛 :-* 😥 😛 🙁 🙁

  • João da Silva

    Ch.c
    [quote]) was your CPMF only on checks or on all financial transactions including wire transfers ? [/quote]

    You know goddamn well that it was on ALL transactions, including the Savings a/c , which is not charged if you lend your money to the goddamned banks for more than 3 months. Of course, when you trasfer the money from your Checking a/c to Caderneta, they deduct the CPMF and return it only when you withdraw the money after 3 months. Of course you know it and pretend that you don’t know. Also you goddamn well know that the interest rate on Saving a/c is LAUGH,LAUGH,………………… That means the velhinhas are screwed!

    [quote]Brazilian oligarchy have not understood yet that to be more wealthy, they need to INCREASE their workers salaries. [/quote]

    Oligarchy has not understood and they have their lap dogs in the labor courts who will judge in their favor,but screw a small or medium sized business without any mercy.

    [quote]Who cares if Bill Gates is worth 20 or 50 billion US$…….as long as we have decent livings ![/quote]

    Here you demonstrated your intelligence in spite of your tender age. Who cares about Bill or Warren Buffet are billionaires, as long as they their employees decent salaries to enable them to have good living.

    [quote]AND YOU APPLAUDE AND RE-ELECT THEM !
    [/quote]

    No, I did not elect nor reelect. I don’t applaud them either. You know it 🙁

  • ch.c.

    To Joao !
    But….but……
    1) was your CPMF only on checks or on all financial transactions including wire transfers ?
    2) As to your statement *profits always bigger, middle class being crashed…etc etc” I must laugh…of course, because
    – Normally, the poorest expect also higher profits…by definition ! Thus it is not profits always bigger that must be criticized, but how this profit is shared with workers. Because the workers wages are paid out of Gross Profits.
    – Brazilian oligarchy have not understood yet that to be more wealthy, they need to INCREASE their workers salaries.
    Yesssssss……the higher the workers earn the more wealthy the oligarchy will become.
    – At the end the poors and middle class should become consumers buying goods at an affordable price.
    – The Brazilian Government is not more clever than your oligarch idiots. The more taxes they put on goods, the less it is affordable…by definition. And You can easily see this in the Apple Ipod : it is costing twice as much in Brazil than in most developed countries, not taking in account yet the huge wages differences ! You cant find a better autogoal. In my country such a gadget costs US$ 175 .- or 7 % or so of an illegal maid monthly wages, allowing her to not only feed herself but still cant spend the rest on other pleasures, such as clothes, a car, going to restaurants, holiday and even send some money back home. While in Brazil the cost is US$ 320.- which is in fact nearly twice the minimum monthly wages. Since in my country the selling costs is higher due to higher salaries, no doubt Brazil should be able to sell it at the same price we do, and still make higher profits due to lower salaries. Therefore the Brazilian problem is in the Filthy Tax System and nowhere else. Such a system benefit mostly a minority of citizens having acceptable infrastructures, schools and universities, generous salaries and high pensions for your millions and millions bureaucrats, but not the majority of 90 % of the population.

    Who cares if Bill Gates is worth 20 or 50 billion US$…….as long as we have decent livings ! And would the Bill Gates employees be that much well paid….if the company and the owners are not even better paid than the employees.
    And just look at Jobs at Apple : although I dont know if this is still the case, but when he was re-hired a few years ago, his ANNUAL salary was US$ 1.- yess ONE !!!! Butg he got millions of stocks options that would have been worth not much if he failed.
    Yessss successful entrepreneurs deserve their high net worth.

    But no government deserve to keep nearly 40 % of the annual budget…..just for their well being !

    But you get what you voted and re-voted for : Bin Lula and his 4000 thieves, and of course the 4000 thieves have also 4000 soldiers each……well taken care of ! As we all know rust propagates itself if no one care to put the products to stop rust.
    Most of the remaining 60 % goes to pay the World Highest Interests Rates…..after inflation. Of course the World records rates are beneficial only to the ones mentioned above !

    Yessssss…they screw you time and again without mercy……AND YOU APPLAUDE AND RE-ELECT THEM !

    Stupid question : Who on earth is more masochicht than a Brazilian ??????
    the answer is obviously…..another Brazilian !
    😀 😉 😀 😉 😀 😉

  • Eduardo C.

    JoÀƒ£o da Silva
    I keep thinking to myself…It is not time that humanity eleborate a new system. Search for other alternatives to the economic and political ways that rules the world these days. Comunism proved to be a failure..Capitalism.. is being contested. Profits always bigger, middle class being crashed and the poor becoming more poor, rich becaming richer. It is a global tendency, not only in the devoloping countries.I would like to know your opinion about it

  • João da Silva

    Eduardo C
    [quote]Now we have to wait the next steps of the goverment, they will go after alternatives for this loss! I’m anxious to see Mantega’s abilities now![/quote]

    Dudo, don’t get ulcer getting too “anxious” to see MantegaÀ‚´s abilities. He has NONE. BTW, how are the newspapers in MS reacting to CPMF being booted out?

    Please do keep us informed .

  • Eduardo

    JoÀƒ£o da Silva
    Yes, I’m in favor of the end of this taxes! We pay lots of taxes…and middle class is always crushed.If the goverment really used this money to the SUS would be worth it, but we know that’s is not so. Now we have to wait the next steps of the goverment, they will go after alternatives for this loss! I’m anxious to see Mantega’s abilities now! 😥 😥

  • João da Silva

    [quote]The Learning Curve- Tax Reform, Civil Service Reform and Political Party Reform. [/quote]

    Plus Labor law reform.

    [quote]Does anybody seriously believe that even half of the revenue is being spent on the public health service? [/quote]

    Nope. When it was created in 1993 with the name of IPMF exclusively for this purpose, I was in favor of it.Subsequently, lost faith,because all the governments used it for other purposes.

    [quote]Is the government capable of handling a project like the Sao Francisco River Diversion? [/quote]

    Nope. I feel sorry for Bishop Luiz Cappio and I hope he will give up his hunger strike. Unfortunately, the TV networks are not giving broad coverage to this news, nor the politicians.I honestly wish that the senators who worked hard to kill the bill to extend the CPMF would take this as another cause, request the Bishop to terminate his hunger strike and force the government to review this issue.

    [quote]Let’s hope this is a wake up call for the “courtiers ” in Brasilia[/quote]

    You are absolutely right.This “defeat” for the government may be just symbolic. But at least it proves that there are hundred of thousands of Brasilians who cannot be taken for granted and many of them sent their clear message to their elected representatives about their discontentment about the heavy taxes paid with little benefit in return.

  • daiu

    Here endeth the lesson
    The Learning Curve- Tax Reform, Civil Service Reform and Political Party Reform.
    The awful truth is that the government could not properly manage its own agenda.
    Does anybody seriously believe that even half of the revenue is being spent on the public health service?
    Is the government capable of handling a project like the Sao Francisco River Diversion?
    Let’s hope this is a wake up call for the “courtiers ” in Brasilia

  • João da Silva

    I was SURPRISED to read this news this morning for two reasons:

    1) I was expecting the honorable senators (after bickering among themselves) would vote in FAVOR of extending the CPMF for another 4 years, but they didn’t.

    2) I thought the senator who writes articles preaching morality and promoting the slogan ” Education for everyone” in THIS site would vote AGAINST extending it. He opted to vote in favor. Probably he was promised to be made a minister again!

    It would be interesting to hear from our other distinguished fellow bloggers , especially our eminent and renowned ECONOMISTS based in NJ and Geneva.

  • jo

    sanity
    Finally something good from govt in Brazil. Lula has been threatning opposition members for weeks but in the end, the corrupt president learned that the middle class will not, cannot continue to bear the burden of taxes and theft alone in this country. Everyone must do it. This “tax” is not needed if political theft is reduced a little.

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