Chalk up a resounding victory for the auto manufacturers' lobby in Brazil. Not only did they con the Brazilian government into raising the IPI (Impostos sobre Produtos Industrializados) on imported cars , but also to ignore the Constitution in doing so. The Constitution is quite clear that such changes in the tax structure can only take effect 90 days after publication in the DOU. However, they were implimented the very same day and as you could guess are the subject of legal actions.
All this as a knee-jerk reaction to the Brazilian auto makers' moaning and crying about not being able to compete against the so-called "Asian Invasion". Awwwwwww, what a pity. Brazilian cars are so absurdly overpriced and of such shoddy quality it's no wonder they can't compete against the reasonably priced well-built cares coming from China and Korea. So as a result the average Brazilian citizen takes it in the neck once again. The increase in IPI not only puts the dream of owning a 0km car farther out of reach but it is essentially a form of double taxation and an affront to the free market system. Protectionism at its very worst.
Of course national auto makers and those from other Mercosul countries and Mexico are exempted from the increase. Nice to see that Dilma and crew are more concerned about protecting the jobs and income of our "HERMANOS" in Argentina and Mexico than they are about doing something to help ease the heavy tax burden on the little guy here in Brazil. Will the increase in IPI help national car makers be more competitive? Not a chance! It will only serve as a blank check to jack up the base price of their already overpriced rolling junk heaps and a year or two down the road they will start crying again and look for further increases in the IPI. Will it protect Brazilian jobs in the auto industry? Not at all. In fact, now the auto plants that these Chinese and Korean manufacturers were committed to building here in Brazil have become less viable and are in serious jeopardy of being tanked, taking with them many potential new jobs in the industry.
If the Brazilian government had any sense at all they would understand that the best way over the short term to give national car makers a competitive edge would be to reduce the IPI for them, not jack it up for the imports. They would be forced over the long term by the growing demand for the Asian imports to become more efficient and competitive both in their manufacturing and pricing. Once again the average Brazilian gets the short end of the stick. Too bad they don't have their own lobbyists in Brasilia....... wait a minute, silly me - I thought that was what Federal Deputies were supposed to be.