Brazil pension reform sponsor seeks higher taxes on banks

The sponsor of the massive pension reform in Brazil suggested increasing taxes on banks to compensate the lower savings the reform would generate after political concessions.

Lawmaker Samuel Moreira of PSDB party suggests hiking the rate of social contribution on net profit (CSLL) from 15% to 20%.

Such an increase would create additional tax income of 50bn reais (US$13bn) in the next 10 years, Moreira said in a televised presentation.

Moreira’s suggestion comes after he watered some controversial sections in the original proposal down to gain support from the opposition. Parts he smoothed out related to low income earners older than 65, a capitalization regime, and the review of rural worker categories.

Main points of the proposal like a minimum retirement age of 65 years for men and 62 for women, and an increase in the contribution rates and periods for both public and private sector employees remain in place.

When the government presented the original proposal earlier this year, it expected the reform to generate savings of up to 1.2tn reais (US$307bn) in 10 years. But with those changes, predicted savings would drop to around 900bn reais.

"Pension reform is a fiscal necessity, there is no doubt. But it is also a question of social justice," said Moreira.

Getting the reform approved requires constitutional changes, which 308 of the 513 lawmakers in the lower house need to back. In the senate, the reform requires a two-thirds majority.

GENERAL STRIKE

To protest the pension reform a general strike took place Friday with support form public transportation and metal workers, leading to blocked highways and halting the operations of São Paulo’s metro system. 

“The general strike is part of our fight to ensure that Brazilians have the right to retire, have the right to the social security system," the head of the largest union CUT, Vagner Freitas, said.