For various reasons, the Brazilian industry is losing internal and external competitiveness. Recently launched the program "Brasil Maior" includes, among other actions, the change in the incidence of employer pension contributions of some sectors, leaving the incidence on the payroll to focus into the gross revenue (MP 540/2011). This paper has estimated the impact of this change, considering a 20% increase in rates of COFINS to maintain tax neutrality. The results suggest there will not be major macroeconomic consequences, although the industrial sector showed strong growth of output and employment, with small reductions in agriculture and services.
tax reform; social security contribution; welfare
