That's right, the new Playstation 5 for R$ 1,400.00. No tricks or misleading advertising. No more paying more than five minimum wages every time your favorite game maker launches a console. Forget the endless credit card installments and the plight of being able to play only a limited selection of games, after all, with the country's economic situation, COVI-19 crisis and the dollar on the heights, who would be able to buy the console and a decent selection games at the same time? But, how could it be possible? Where can I make the purchase? Be patient, as we will get there.
At the beginning of the week, the federal government published in the Official Gazette, the presidential decree that reduces the Tax on Industrialized Products (IPI) for video games - more specifically for video game consoles and machines. The measure was announced by the president on his social networks. This is the second time that the President of the Republic has reduced the IPI on these devices. Also in August 2019, a decree reduced the tax rates from 20% to 50%, to something around 16% to 40%.
Now in 2020, the rates will vary from 6% to 30%, for consoles and gaming machines, since the IPI has been reduced from 40% to 30%. Peripherals, accessories and gaming machines had their rates changed from 32% to 22%. Finally, video games with embedded screens, such as the Nintendo Switch, had their rates changed from 16% to 6%.
With all the reduction of IPI rates, the reader must now be thinking that he will be able to buy his PlayStation for R $ 1,400.00, right? Unfortunately, the reduction granted by the government will not be enough for the console to leave the current price of almost R $ 5,000.00 and go to R $ 1,400.00. However, it will still be possible to achieve a substantial reduction of R $ 3,600.00 in the current amount, if the government chooses to zero the tax burden on the consoles.
Still in 2015, the Brazilian Institute of Tax Planning (IBPT) released a study pointing out that the tax burden on consoles and games was 72.18%. The survey took into account the collection of state and federal taxes such as PIS / CONFINS, ICMS, IPI and Import Tax. Bringing the study into the current context, without considering the IPI reductions practiced by the Bolsonaro administration, from the current R $ 5,000.00 of the PlayStation 5 price, approximately R $ 3,600 are related to taxes.
Thus, as the consoles are imported products and their value is quoted in dollars, the real situation may be even worse, since the US currency is valued in relation to the Brazilian real and there is no prospect of improvement in this scenario. The latest Focus Bulletin of October 26, 2020, for example, released an exchange rate projection that is not encouraging for gaming consumers. The projection is that in 2020 the dollar will leave the house of R $ 5.35 and move to R $ 5.40, while in 2021 the projection points that the currency will leave the level of R $ 5.10 and move to R $ 5.20.
Any reduction in taxes is positive, including those made by the current management. However, they prove to be insufficient to bring the value of the PlayStation to the value promised in the title of this article. But what to do then?
The answer is simple: reduction (perhaps extinction) of all taxes - at the federal, state and municipal levels - that affect consoles and electronic games. Without such a measure it will never be possible to have the console with the price close to what is practiced outside the country.
This type of solution will not be adopted by the public authorities without pressure from civil society, as this is a substantial waiver of revenue for the State. Therefore, it is necessary that the community of consumers of these products unite and put pressure on the public authorities so that there are substantial changes, not just of a palliative nature. Initiatives such as the Proposed Amendment to Constitution No. 51, of 2017, which intends to confer tax immunity on consoles and games for video games produced in Brazil are a step in the right direction and deserve support.
It is necessary to abandon sectorial populism and understand that consumers are not interested in strengthening national industry. What most people want is to be able to consume electronic products - whether made here or in China. In this sense, in the short term what could allow a substantial reduction in the price of consoles would be the reduction of the import tax rate to the legal minimum allowed - such a reduction is the responsibility of the Executive Branch and would be much more than a simple reduction in the IPI.
Allan Augusto Gallo Antonio has a law degree from Mackenzie Presbyterian University and is following a master's degree in Economics and Markets at the same institution. He is a researcher at the Mackenzie Center for Economic Freedom