Mercadante proposes increasing taxes on betting to offset IOF (tax on financial transactions) and advocates for a reduction in the Selic rate (benchmark interest rate).

The president of BNDES, Aloizio Mercadante, suggested raising taxes on sports betting and online gaming platforms (bets) as an alternative to lessen the impact of the IOF increase, a measure that could pose risks to the credit sector. The proposal was presented this Monday (26) during an event commemorating Industry Day held in the auditorium at BNDES headquarters, in Rio de Janeiro.

Mercadante argued that Finance Minister Fernando Haddad should not bear the sole responsibility for complying with the fiscal framework and stated that there is room for a reduction in the Selic rate. The proposal comes at a delicate time for the betting sector, which is already facing increasing tax pressure.

The institution's president argued that increasing taxes on betting could generate enough revenue to offset the effects of the IOF increase, a measure recently implemented by the government. However, experts warn that further increasing taxes on betting companies could make the Brazilian market less attractive, leading companies to cancel their licenses at the end of their concession periods and encouraging offshore and clandestine operations.

According to Mercadante, it is necessary to create viable alternatives that guarantee the security of tax revenue. He criticized the stance of business entities that only publish manifestos without presenting concrete proposals for the country's economic problems.

The event was attended by Minister Fernando Haddad. Mercadante took the opportunity to express his support for the Finance Minister, stating that Haddad cannot face the fiscal challenges alone.

The president of BNDES highlighted that Minister Haddad has the responsibility to comply with the fiscal framework, but that this task should not be exclusively his. Mercadante emphasized the need for a shared agenda and proposed the creation of a dialogue table to discuss alternatives.

In his speech, Mercadante pointed out that the IOF (Tax on Financial Operations) is a restrictive credit measure, but that it has been at higher levels in the past. He explained that, unlike the Selic rate which generates debt, the IOF generates revenue and contributes to reducing the debt-to-GDP ratio.

The president of BNDES also criticized the current level of the Selic rate, classifying it as "an outlier from any perspective when analyzing the Brazilian economy." Mercadante did not specify what the ideal level for the basic interest rate would be.

It is worth noting that the tax on international financial transactions has already increased from 0,38% to 3,50%, representing an 821,05% adjustment in the rate. This could cause the total tax burden on the betting sector to reach 52,57% in some transactions, when other taxes such as withholding income tax, CIDE, PIS, and Cofins are added, even before the implementation of the new selective tax rates proposed in the tax reform.

“We need an agenda that can't just be from the Finance Minister, so the first thing I want to do is this: let's create a dialogue table. And the business entities, more than just issuing manifestos—I've been doing that since my time at the student union, 50 years ago, I don't think it works very well—have to bring proposals. It's no use saying, 'No, you can't,'” Mercadante stated.

The president of BNDES completed his suggestion: “I'll make a public suggestion here: let's increase taxes on betting, which are eroding public finances, and it's an area that needs more revenue. And with that, it's not easy to collect taxes from betting, but we could use that to reduce, for example, the impact of the IOF (tax on financial transactions) and create alternatives.”

Regarding the Selic rate, Mercadante stated: “There is room to do it gradually, safely, and sustainably. I never talk about this, but today, since you (Haddad) are here, I spoke to defend you, because you cannot be alone in handling this gigantic challenge that we have ahead of us.”

Finance Minister Fernando Haddad was defended by Vice President Geraldo Alckmin and the president of BNDES (National Bank for Economic and Social Development), Aloizio Mercadante, at an event at the development bank's headquarters commemorating Industry Day.

"Today, the federal tax burden, the federal primary revenue, is lower than it was ten years ago. So we have to understand that we have challenges to face, especially regarding budgetary balance, which, as Mercadante said, is everyone's responsibility," said the minister.

Shortly before, the president of the CNI (National Confederation of Industry), Ricardo Alban, had urged Haddad to be more rational with public spending and appealed to the government not to increase the tax burden.

“We can no longer think about the tax burden,” he stated, addressing the minister. “We have to help find tax rationality. Not only for bets, there are big tech companies, other alternatives may be politically difficult, but we are willing, we want to, and we have an obligation to contribute to finding the most productive paths,” he said.

New Industry Brazil Program

In celebration of Industry Day and the resumption of industrial policy, with the Nova Indústria Brasil program, Brasil 247, BNDES and Agenda do Poder promote, this Monday (26), the Nova Indústria Brasil forum, a meeting that will bring together some of the main political, business, trade union and intellectual leaders in the country to discuss the direction of national reindustrialization, focusing on innovation, sustainability, sovereignty and economic modernization.

The event was opened by Vice President Geraldo Alckmin, who is also Minister of Industry and Commerce, and by the president of BNDES, Aloizio Mercadante, who will present the structuring axes of the New Industry Brazil. Among the authorities present are also the Minister of Finance, Fernando Haddad, the Minister of Institutional Relations, Gleisi Hoffmann, the president of Petrobras, Magda Chambriard, and the president of ABDI, Ricardo Cappelli, as well as the president of CNI, Ricardo Alban.