The provisional policy of tax cuts for the automotive sector announced by the Federal Government last week is not yet in effect, but it is already stirring consumers and the market. The main doubt, at the moment, is: how will the prices of the cheapest cars in Brazil be with the new rules?
Before talking about how prices will be, let’s remember. The vice-president and Minister of Development, Industry, Commerce and Services, Geraldo Alckmin (PSB-SP), revealed that tax cuts from 1.5% to 10.79% will be made on models worth up to R$ 120 thousand, in IPI (Tax on Industrialized Products), PIS (Social Integration Program) and COFINS (Social Security Financing Contribution) rates.
But for these discounts to be covered, there are some rules that automakers need to adopt. The smaller the car, the more domestic components it has and the less polluting it is, the percentage of 10.79% can be reached. This is not to mention the possible cuts in equipment or more tax breaks that states can make, if necessary.
The government’s plan and the will of President Luiz Inácio Lula da Silva (PT-SP) was for entry-level models to be priced below R$60,000. But this value will not only not be possible, as the measures will be provisional, lasting 3 or 4 months, as revealed by the Minister of Finance, Fernando Haddad (PT-SP).
Considering some variables, such as those mentioned by Minister Alckmin and making a list with decreasing discounts, the Canaltech did the math and will tell you how the prices of the 10 cheapest cars in Brazil will be in their entry versions when the government measures come into effect.
*Editor’s note: it is worth remembering that the government has not announced the exact criteria or the percentage that each rule will deduct from the initial price of the car.
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