Income tax exemption for those earning up to R$5,000 a month will inject R$28 billion into the economy in 2026, according to calculations by the Federal Revenue Service.
“The extraordinary stimulation of trade, industry, the service sector and entrepreneurship will generate more jobs and more income. The entire country will benefit,” Lula said.
The president approved the bill last Wednesday, which also sets a minimum tax of 10% on people with an annual income of more than R$600,000 to compensate for the loss of revenue resulting from the exemption.
The new law also gives an income tax deduction to those who earn up to R$7,350.
When explaining the new law in his speech, Lula emphasized that it “attacks the main cause of inequality in Brazil: so-called tax injustice,” and that compensation will not come from cuts in education or health, but from taxing the so-called super-rich.
“This income tax relief means more money in your pocket, which means increased purchasing power, which means an increase in consumption, which makes the wheel of the economy turn,” Lula said, calculating that a person with a salary of R$4,800 could save R$4,000 in one year.
The president added, “The change in income tax is a decisive step towards changing this reality (inequality), but it is only the first step. You can be sure that we will not stop there. What we want is for the Brazilian people to have the right to the wealth that they produce with the sweat of their labor.”