The Brazilian government is considering trimming a 20 percent tax on payrolls to encourage hiring and make companies more competitive, newspaper Folha de Sao Paulo reported on Tuesday. The tax reduction might be between two and three percentage points, Folha said, without saying how it obtained the information.
Revenue losses stemming from the reduction in the tax, which is used to fund social security, are estimated at 11.6 billion reais ($5.9 billion), Folha said. Government officials are at odds over the measure, saying it is hard to weigh the benefits while fiscal costs might be high, the report said.
Cabinet ministers are concerned the proposal may spark demands by lawmakers to extend concessions to pensioners, inflating the social security deficit, Folha said. Finance Ministry officials were not immediately available for comment on the story.