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President Lula da Silva announced the end of the Remessa Conforme program, which taxed small international purchases. He framed the move as relief for ordinary people and a boost to his standing ahead of the elections against Flavio Bolsonaro. Small purchases will no longer pay the import tax, while other taxes stay in place. The change will be enacted through a provisional measure. Retail critics warn it could erode government revenue and tilt competition, underscoring the balance between popularity goals and fiscal policy.
Lula Ends Controversial Tax on Small International Purchases Ahead of Elections
Five months before the elections, President Luiz Inácio Lula da Silva announced the termination of the 20% import tax on international orders up to US$50. The measure, tied to the Remessa Conforme program, will be revoked to try to lift Lula’s standing as he faces a stronger challenge from Flavio Bolsonaro. Officials say the move is aimed at helping the popular classes but it draws pushback from domestic retailers and raises questions about the fiscal balance.
What Changes and When
Starting on Wednesday, purchases up to US$50 will be exempt from the import tax, while the ICMS still applies. The change will be enacted through a provisional measure signed by the president, with a parallel government order from the Ministry of Finance to set the zero rate. The government notes that the policy will not end all duties on small imports; the ICMS remains in place and continues to vary by state.
Economic Impact and Revenues
Data from the Receita Federal show that in the first four months of 2026, import tax collections reached about R$ 1.78 billion, up around 25% year over year. Officials say the direct fiscal impact of completely removing the tariff on small orders is modest, estimated at well under R$ 2 billion in annual terms. Supporters argue the change will ease the cost of living for many households, while critics flag potential revenue losses and shifts in retail competition.
Political Context
Government officials describe the move as a tool to bolster public support during a tight electoral period. They argue the policy benefits common consumers and reflects a broader effort to ease living costs and improve perceived income conditions. Internal briefings note the measure could help the administration counter growing electoral headwinds as the opposition strengthens its campaign in some polls.
Background: Remessa Conforme and Related Taxes
The so-called Remessa Conforme program was created in 2024 to allow a reduced tariff on small international orders from certain overseas retailers. Under the program, purchases up to US$50 faced a reduced import tax of 20% (down from 60%), but buyers still paid the ICMS, ranging from about 17% to 20% depending on the state. Purchases above US$50 continued to be taxed at the higher rate. The current reform would remove the 20% portion for items within the threshold while keeping ICMS intact.
Conclusion
The decision to end the 20% import tax on small orders up to US$50, while keeping ICMS, and to implement the change via a provisional measure, signals a clearly political calculation intended to ease living costs and bolster Lula’s standing ahead of the elections. Supporters point to a modest fiscal impact and direct relief for ordinary households, whereas critics warn of potential revenue losses and distorted market dynamics that could disadvantage domestic retailers. The measure highlights the tension between popularity goals and fiscal policy, underscoring that short-term public approval risks future macroeconomic and revenue costs. Its ultimate effects will depend on how revenues evolve, how ICMS varies by state, and how the market adapts in the pre-election period.
Frequently Asked Questions
- Why did Lula end the tax on small international purchases? Lula wants to help the poor. He also aims to improve his popularity before the elections.
- What exactly changes for buyers starting Wednesday? Up to US$50, there is no import tax. ICMS still applies. For purchases above US$50, the 60% import tax stays in place.
- How will this affect government revenue? The change lowers some tax money. The total gain from small purchases is still small. Officials say the impact is limited.
- What are critics saying about this move? Retailers fear unfair competition with foreign sites. Some worry about tax signals and future costs. Others say it helps ordinary people.
- Is this a political move before the elections? Yes. It is meant to boost Lula’s image. Internal polls show popularity troubles in other areas too. The measure is part of a broader push to win votes.