The president of the Brazilian Federation of Banks (Febraban), Isaac Sidney, told Estadão that the increase in taxes for the sector will make credit lines important for economic recovery, such as real estate and vehicle financing, payroll loans and working capital more expensive. . He says the measure does not help the Central Bank, which is alone in the “very difficult” challenge of mitigating the effects of double-digit inflation.
Read the main excerpts from the interview below:
After a soap opera of months, the government increased the taxation of banks to make the Refis do Simples. what mr. did you like this option?
By raising taxes, the government made a mistake and chose, again, to burden the consumer, which will make bank credit even more expensive. It is intriguing that, with much more profitable sectors and with high volumes of tax incentives, banks will be penalized with a higher tax burden.
In these two years of the pandemic, banks were essential to preserve jobs and companies with R$ 8.5 trillion in credit, irrigating the entire economy. We were the 16th most profitable sector in 2020, that is, 15 others were ahead in terms of profitability, but only banks are footing the bill.
What is the consequence for credit?
It is, at the very least, a bad sign for those who need credit. Any percentage tax increase for banks directly impacts the cost of borrowing, which is already expensive.
The incidence of more taxes on credit, even with a small temporary increase, puts pressure on the spread (the difference between the cost of raising money by the bank and what it charges the customer), and worse, at a time when society is supporting a sharp rise in the basic interest rate, which the Central Bank, correctly, sees itself in the contingency of acting to contain the escalation of inflation.
The measure, although it may even target banks, hits consumers once again and makes important lines in the economic recovery process more expensive, such as real estate and vehicle financing, payroll loans and working capital.
How does the measure pressure inflation?
Inflation is in the clouds, running at 12% a year. The impression is that the government likes inflation and doesn’t care about the consequences of more inflationary pressure, something that society no longer accepts. Tax increases put even more pressure on the cost structure of families and companies, feeding back the inflationary process. This is basic.
It’s amazing how people are considering raising taxes at a time when the economy is slowing down and when the Selic rate and inflation are at an all-time high. In addition to showing insensitivity towards people and companies, particularly micro and small ones, which most need credit, raising taxes does not help the BC (Central Bank), which was already alone, in the very difficult challenge of mitigating the already strongly double-digit inflation.
A trophy is sought to have the narrative against banks, on the assumption that raising taxes in the sector yields political dividends and can give votes, but who is targeted with a clear shot is the consumer.
How does the increase in CSLL influence bank interest?
Everything that weighs on financial intermediation ends up in bank interest, and taxes represent 20% of the spread. Therefore, more CSLL for banks means, at the end of the day, more interest for the borrower. In the last 12 months, with the increase in the Selic and in the cost of funding, there has already been an increase in average interest rates for credit to families and companies.
This tax increase is very bad and its effects will be the usual ones, which should have been avoided: higher costs for those who most need credit in an already very adverse scenario in which inflation is eroding people’s purchasing power.
What is the overall impact for the economy?
Tax increase is always harmful as it is a source of costs. It will make it even more difficult for the economy to recover, which will slow down in 2022, given the more severe financial and monetary conditions.
What should the government have done to offset the fiscal cost of Refis for small businesses?
Which unfortunately it didn’t. To face fiscal difficulties, avoid negative impacts on the cost of credit and provide a consistent recovery of the economy, there is only one way: to persevere in approving the structural reforms agenda in Congress.
Did Minister Guedes break his promise that the increase would only be that of last year?
Regardless of the promise, it is not reasonable for banks to have, in 2021, supported an increase of five percentage points of CSLL, under the commitment that the increase would be circumstantial and for only six months, and now, shortly after, there is a new imposition of burden on one of the sectors that have helped most in the economic recovery. I find it regrettable, because we have fulfilled our part and we already pay more taxes than other sectors.
The information is from the newspaper O Estado de S. Paulo.