RIO DE JANEIRO (AP) — Brazilians will go to the polls Sunday at a time when the economy is only slowly recovering from a prolonged recession and more than 13 million people remain out of…
RIO DE JANEIRO (AP) — Brazilians will go to the polls Sunday at a time when the economy is only slowly recovering from a prolonged recession and more than 13 million people remain out of work.
Here is a look at the main economic issues at stake:
President Michel Temer had hoped to pare back Brazil’s generous pension system to lower the country’s deficit, but his proposal to raise the retirement age led to nationwide protests and ended up flailing in Congress. Economists agree the next president will have to tackle this issue.
Far-right congressman and poll-leader Jair Bolsonaro has proposed allowing workers to pay into individual retirement accounts. If employers decide to use such a system, they would be allowed to decrease employee benefits.
Workers’ Party candidate Fernando Haddad, who is in second place, has rejected the idea of cutting pension benefits and says that he would reduce the deficit by growing the economy and creating more formal contracts for workers.
Center-left candidate Ciro Gomes and Sustainability Party candidate Marina Silva both favor a sort of individual retirement account system.
Center-right candidate Geraldo Alckmin says he will create a single pension system for everyone and establish a more rigid minimum retirement age.
High tax rates and convoluted bureaucratic processes have made Brazil a hard place to do business, according to a World Bank report that ranked the South American nation 184 out of 190 countries under the rubric of ‘Paying Taxes.’
Bolsonaro has vowed to cut taxes and rejected his own financial adviser’s suggestion of a tax on financial transactions.
Haddad plans to fund social programs and eliminate income taxes for the poorest by increasing rates for the super-rich. The leftist has also proposed gradually replacing other taxes with a value-added tax.
Gomes proposes taxing the rich to invest in education and social programs, while Silva says she’d avoid the need to raise taxes by curbing public spending and combatting corruption.
Alckmin of the Brazilian Social Democracy Party also wants to replace many taxes with a value-added tax.
Last year, Congress loosened Brazil’s strict labor laws, allowing for more flexible working hours and optional contributions to unions.
Bolsonaro plans to let employees entering the labor market decide between following the new labor laws or negotiating their own contracts.
Both Haddad and Gomes have denounced the labor reform as an attack on workers’ rights and want to replace it with more labor-friendly legislation.
Silva told Globo News she would largely maintain the labor reform but scratch “draconian” measures like forcing pregnant or breast-feeding employees to work in potentially unsanitary conditions.
Alckmin has said he will “not repeal any of the labor reform’s key measures.”
Some say that many of Brazil’s 149 state-owned companies should be privatized, arguing they are inefficient and subject to corruption, as shown by a multi-billion dollar kickback scheme centered on Petrobras. Others worry about too much foreign involvement in Brazil’s most strategic industries.
Bolsonaro has said he wants to privatize many state-owned companies, but would exempt the banks Caixa Economica and Banco do Brasil.
Haddad plans to limit privatizations, saying state companies are vital for the country’s development.
Gomes’ economic adviser said his party would consider privatizing about half of state-controlled companies while keeping Petrobras, Banco do Brasil and the electricity company Eletrobras in state hands.
Silva wants to keep Petrobras, Banco do Brasil and Caixa Economica public, and would analyze the benefits of privatizing other companies.
Alckmin has said he doesn’t trust the state to run businesses and wants to sell many to make the economy more efficient. However, he says he would not privatize Petrobras and Banco do Brasil.