High cosmetic tax begins to be passed

Second largest network of salons of Rio de Janeiro, the Walter's noticed in recent months strong fall in demand for services, while customers who before did hair and manicure brush weekly started to make them biweekly or even once a month.
Demand reduction extended to services such as painting and treatment for hair, makeup, among others. "The customer is leaving less than House, avoiding eating out and, to save money, is doing less and less foot brush and hand," said Walter Son, partner of the brand that has 12 units in the State.
The scenario for the salons can be even more difficult in the face of increasing the tax burden on the cosmetics industry, which will begin to feel the strongest impact from this month prices of products like perfumes and makeup. In may, the federal Government passed the tax on industrialized products (IPI) also of cosmetics wholesalers, in addition to the already charged by manufacturers, which according to the Brazilian Association of the industry of personal hygiene, perfumery and cosmetics (Abihpec) will raise prices by as much as 12 percent above inflation, which reached 8.89% for the 12 months to June in the IPCA. The entity's forecast is that sales in the industry 17% in 2015 fall back.
The products affected by the change are some types of perfumes more focused; makeup for lips, eyes and face; enamels; skin care products; shaving preparations and fixers, hair straighteners and paintings, among others. "No doubt will affect sales," said the President of Abihpec, João Carlos Basilio. According to him, another effect of high taxes was the anticipation of industry sales for the wholesale and retail in May and June, which should impact performance in coming months. "The effects with regard to price increase [to shopkeepers and consumers] are being felt from July," he added, noting that in August the impact will be "total".
Industry sales
Until April, when the measures had not yet entered into force, industry sales were already falling 3% to 5% in comparison with the same period last year, discounted the inflation, said the President of Abihpec, which has not reported total revenue. In 2014, the industry's revenue was r $ 101,7 billion, an increase of almost 11% on the previous year.
According to Abihpec, the percentage of increase of prices for cosmetics manufacturers may vary between companies, with some companies may choose to reduce the margin to avoid losing market share.