World

Overturned veto on payroll tax exemption cheers the Brazilian footwear sector

Dec 21, 2023 Brazil

The overturning of President Lula’s veto of the bill to extend the payroll tax exemption until 2027 in the National Congress on the 14th of December has lifted the spirits of the footwear sector

For the Brazilian Footwear Industries Association (Abicalçados), the continuation of this mechanism, which allows the 17 sectors that employ the largest number of people in the country to replace the 20% employer social security contributions with rates varying between 1% and 4.5% on gross revenue, comes as a “relief at a time that is still complicated for the [footwear] sector”.

The Executive President of Abicalçados, Haroldo Ferreira, estimates that, in the footwear sector alone, more than 20 000 jobs would be lost in the first year if the exemption were not maintained. “With an additional burden of more than 720 million Brazilian reais per year, the footwear industries would have to recalculate their routes, investments and hiring”.

“We would have a drop in production of more than 150 million pairs and the loss of thousands of jobs in the very first year”, he emphasises, already factoring in a fall in production of around 1% over 2023. Therefore, the association thanked the National Congress for “approving the continuation of a policy”, after a Presidential veto that had taken the industry by surprise.

The Brazilian footwear industry comprises more than 4 thousand companies in 10 Brazilian states, directly employing 300 thousand people. Including the entire production chain, from suppliers to retailers, the industry directly and indirectly employs more than 1 million people.

Image Credits: archpaper.com

Brazil Employment Footwear Legal Organisations Production Tax