Reduction on the IPI gives fresh impetus to Movelsul

 
The largest furniture fair in Latin America is expected to sell 10% more than anticipated due to cuts on taxes
The aisles at Movelsul premises were filled with expectation since before the opening of the pavilions in Bento Gonçalves. Last week, while Sindmóveis team  checked the final details of the event, the government measure that would reduce the tax on manufactured products (IPI) for furniture was highly expected. Last night (March 23), during a dinner with the sponsors of the exhibition, the most discussed subject was whether or not the IPI would be reduced in the coming days.
Confirmed at night, after an announcement by the Minister of Finance, Guido Mantega, the news did not come through in time to be toasted by the management and investors of Movelsul. But there is a lot to celebrate. After all, the 327 exhibitors at the largest fair of the furniture sector in Latin America still have four days to negotiate products that are 5% cheaper with shopkeepers  – this percentage corresponds to the IPI rate paid by the manufacturers. In a special issue of Gazeta Oficial, which circulated on Monday (March 23), President Dilma Roussef signed the IPI exemption on the furniture line for three months. The measure also exempts laminate coatings and reduces taxes on lamps and chandeliers (from 15% to 5%) and wallpapers (from 20% to 10%).
The news came as an extra stimulus to a trade show that already had positive figures. On the first day, five thousand people visited the event – a thousand more than on the first day of the 2010 edition. With the reduction on the IPI, the president of Movelsul, João Paulo Pompermayer, expects the initial forecast of business, which was US$ 330 million, to increase by 10%. “Here at the fair we will have an immediate impact, in the very short term. But the measure will continue to favor sales in the sector while the law is in force,” he said.
Interview: João Paulo Pompermayer, president of Movelsul
What is the impact of this measure on the furniture industry and on consumers?
The measure will have immediate impact because it reduces the cost of products by 5%. This means that it can be felt immediately since products will cost 5% less for retailers. But for consumers, the reduction could be even greater, because this cut has a knock-on effect. It is an important measure, which shows that the government is taking good care of the sector.
 
Was the government announcement what the sector expected?
The furniture sector has long demanded that reduction, which took a long time to take place, but finally it was announced. We also believe that only three months is too little time. We expected this measure as a palliative, but we know it is not enough to solve the problems the industry is facing.
 
What are the other problems that still affect the furniture manufacturers?
We have a heavy tax burden. The reduction on the IPI itself as a measure to encourage the industry and consumption proves that we pay too many taxes. The leaders of the furniture sector and many other sectors continuously struggle for the tax reform to relieve the supply chain and make our industry more competitive. We also have logistical problems with poorly maintained roads that generate expensive freights. And finally, we need a more effective exchange rate policy, one that promotes exports.
 
How will Movelsul be impacted by this announcement?
 
We can say that, considering the reduction on the IPI, we will have at least 10% more business at the fair. The impact is immediate, in the very short term.
 
What about the industry after these three months?
We will continue negotiating with the government so that this measure is extended, because we consider this exemption period to be short. While the measure is in force, we will have an increase in consumption, which will be intensified in the last days. The measure will boost sales while the law is in force.