THE IMPACT OF PARTIAL REVERSAL OF PAYROLL EXEMPTION

Authors

  • Pedro Gomes Vasconcelos Universidade Federal de Pernambuco
    • Nelson Leitão Paes

      DOI:

      https://doi.org/10.22456/2176-5456.71093

      Keywords:

      Payroll tax exemption, Social security contribution, Tax policy

      Abstract

      In 2015, with the worsening of Brazilian fiscal crisis, Law No. 13.161 was enacted,
      which reversed in part the exemption of payroll taxes, increasing and creating new rates
      for the social security contribution on gross revenue. Estimates suggest that there was a
      reduction of R$ 5.4 billion in tax breaks involved. This article studied the impact of this
      reversal, even partially, in the payroll tax exemption. A neoclassical model of general
      equilibrium with closed economy and two intermediate firms was built to study this
      impact. The results suggest that the macroeconomic effects will be negative, but small. In
      the sectorial analysis, the firms that were originally benefited by payroll tax exemption may
      present losses of up to 1% in output, capital and working hours. On the other hand, for
      other firms, the reversal is positive, with small increases in output and employment in these
      sectors.

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      Published

      2019-04-01

      How to Cite

      Vasconcelos, P. G., & Paes, N. L. (2019). THE IMPACT OF PARTIAL REVERSAL OF PAYROLL EXEMPTION. Análise Econômica, 37(72). https://doi.org/10.22456/2176-5456.71093

      Issue

      Vol. 37 No. 72 (2019): Março 2019

      Section

      Artigos

      License

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