Unlike first quarter, April’s result was not boosted by single-investor funds
05/22/2024
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Claudemir Malaquias — Foto: Diogo Zacarias/MF
Boosted by revenues related to consumption and the labor market, federal tax collection in April reached R$228.9 billion, a real increase of 8.26% year over year, according to data released by the Federal Revenue Service on Tuesday. This marks the fourth month of the year with revenue growth exceeding 5%, even after adjusting for inflation.
In the January-April period, total revenue reached R$886.6 billion, a real increase of 8.33% compared year over year. These results set new records in the Federal Revenue Service’s since official records began, in 1995, making them the highest values in 30 years. Without adjusting for inflation, revenue rose by 12.25% in April and 12.85% for the year.
April’s results are primarily attributed to a surge in revenue from social taxes PIS/Cofins, which totaled R$44.3 billion, an increase of 23.38%. This growth was driven by the reinstatement of fuel taxes and reduced use of tax credits from court decisions.
Another factor boosting PIS/Cofins revenue was the enactment of Law 14.592/23, which stipulated that sales tax ICMS must be excluded from the calculation base for tax credits on acquisitions.
Social security contributions were notable from an economic activity perspective, totaling R$52.8 billion in April, up 6.15%. This was due to a 5.11% increase in the wage bill compared to the previous year.
In a report to investors, economists with Warren Investimentos said that April was the first month of 2024 without revenue from the taxation of single-investor funds stocks. Despite this, revenue growth surpassed that of March (7.2%) and January (6.7%), only trailing the February increase (12.3%).
The January-April result is explained by the same factors as in April, including changes in legislation that positively impacted government revenues and more robust economic activity.
Additionally, the accumulated annual result benefited from R$11.44 billion in Income Tax from the stock of single-investor funds, an atypical revenue source that ended in March. A further positive contribution came from a 46.05% reduction in tax compensations from court decisions.
According to Federal Revenue data, companies used R$16.9 billion in tax credits from court decisions to offset their owed taxes from January to April this year, compared to R$31.3 billion in 2023. The fewer tax credits companies use, the more the Treasury collects.
Until last year, there was no limit on the use of judicial credits to offset owed taxes. This year, a limit has been implemented. It is expected that this new limit will result in an additional R$24 billion in revenue for 2024. This figure may be revised when the report on the evaluation of revenue and expenses in the Budget is released this week.
In a report to investors, Fábio Serrano, an economist at BTG Pactual, said that the data up to April indicates stronger-than-expected revenue, but is still insufficient to meet the primary surplus target, even considering the margin that allows for a deficit of up to R$28.8 billion this year.
Mr. Serrano said that the data for May and June will be crucial as they will show the impact of taxation on capital gains from offshore assets and the effects of the floods in Rio Grande do Sul, as well as the mandatory withholding of income tax on single-investor funds.
“In 2023, 5% of federal revenue originated from Rio Grande do Sul, equivalent to R$109 billion. For now, we estimate a primary impact of R$35 billion on the public sector due to the floods,” Mr. Serrano said.
Asked about the impact of the calamity in Rio Grande do Sul on federal revenue, Claudemir Malaquias, head of the Center for Tax and Customs Studies at the Federal Revenue Service, said it is currently difficult to have an economic estimate.
“Of course, we need to monitor the assessment of real losses, because we only have projections so far. While the waters are still high, it is difficult to have an economic estimate,” Mr. Malaquias said. “We will continue to monitor the situation and, when we have the information, we can release detailed data,” he added.
He also noted that the deferral of taxes announced so far does not have a fiscal impact, as the collection has only been postponed and will still be carried out within the current year.
*Por Jéssica Sant’Ana — Brasília
Source: Valor International