IPI tax relief policy and its impact on automotive and related sectors

Abstract

The policy of IPI tax relief in the automotive industry came from the need of answers to the Global Financial Crisis of 2008, which affected Brazil. This way, Brazilian Government set the reduction of the percentages of rates applied to automotive products and related sectors, according to several factors such as engine power, fuel type and production site, in order to restore the sector demand and stimulate the economy. In this context, this work aims to evaluate the implications of IPI tax relief policy, since 2009, on the turnover of joint-stock companies of the automotive and related sectors. The methodology was a multiple regression analysis model with Dynamic Panel data, in order to explain the variations of companies' turnover in the sector, regarding IPI tax relief. The data used were of 84 companies of this sector, for the period from 1998 to 2015, based on the software Economática. The results showed a decrease of IPI tax collection in the periods of relief, both in general and specific scope. In addition, we verified that the adoption of the policy had a negative influence on the turnover of the evaluated companies. Thus, we concluded that the tax policy under analysis did not contribute to an increase of automotive sector companies' turnover.