Brazil – Layoffs by IPI Tax Auto Makers Recipients Not Tolerated

Auto makers in Brazil that benefited from a cut in what is known as the IPI tax can’t reduce employment while the tax cuts are in effect, Brazil’s Finance Ministry reiterated Friday. Some interpreted the statement as a direct message to General Motors Co. (GM), which is considering shutting down production at one of its factories.

The ministry “won’t tolerate the violation of the agreement to not fire workers in the industries benefited by the reduction in the IPI,” Finance Minister Guido Mantega said Friday, according to a statement from his press office.

In May, Brazil’s government reduced the IPI tax after vehicle sales slumped in the first months of this year. In exchange for the stimulus measures, which also included a reduction in reserve requirements for banks that issued auto loans, the government demanded that companies maintain or increase employment levels in Brazil.

But falling demand for cars produced at GM’s factory in Sao Jose dos Campos led the car maker to consider shutting down the assembly line that employs more than 1,500 people.

GM, which met with the minister Monday, declined to comment Friday. The minister said after the Monday meeting that, because GM was maintaining employment levels in Brazil as a whole, “it’s not up to the government to get into the question of the internal organization of factories.”…

via Brazil ‘Won’t Tolerate’ Layoffs By Tax-Cut Recipients | Fox Business.

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