The Brazilian association of Footwear industries, Abicalçados, has vowed to work towards overturning the presidential veto on the payroll tax relief policy, suggesting it could put 20,000 people out of work.

Brazilian President Luiz Inacio Lula da Silva vetoed the bill which was set to extend a payroll tax exemption to 17 sectors until 2027 as the government looks for ways to increase its revenue, with the goal of erasing its fiscal deficit by next year.

Abicalçados president Haroldo Ferreira said: “The end of the policy could generate a wave of unemployment. We estimate that, in the first year of a possible re-encumbrance, we will lose more than 20,000 jobs, almost 10% of the total workforce in the footwear industry.”

“However, we are confident of overturning the veto,”

Adopted in 2011, payroll tax relief allows the replacement of the employer's social security contribution of 20%, levied on the payroll, with rates that vary between 1% and 4.5% on gross revenue. In the case of the footwear industry, the rate is 1.5%

Deputy Lucas Redecker (pictured), president of the Parliamentary Front in Defence of the Leather Footwear Sector, said: “There are enough votes to overturn the veto, but we remain vigilant. The next step, now, is to get it on the agenda, at the latest, by December 15.”