Agribusiness and services parliamentary fronts unite for changes in tax reform – 05/21/2023 – Market

Two of the largest sectoral parliamentary fronts in the National Congress will act together to demand differentiated treatment for the agribusiness, commerce and services sectors in the tax reform.

The fronts are groups that bring together at least a third of the members of the Legislative Branch (minimum of 198 parliamentarians, including deputies and senators) from several parties around a theme. It is common for the same parliamentarian to be part of more than one group. Therefore, the members of the fronts can represent the interests of more than one sector of the economy.

With more than 300 representatives in Congress, the FPA (Frente Parlamentar da Agropecuária) claims that a different rate in the new tax on consumption is just one of the group’s various demands. This is also one of the points advocated by the FCS (Parliamentary Front in Defense of Commerce and Services), which brings together more than 200 congressmen.

The Mixed Parliamentary Front for Industry, the sector that has most ostensibly supported the reform, should be installed in the next few days. It will be chaired by deputy José Rocha (União-BA), who is also vice-president of the FPA.

Until 2022, there was a parliamentary front dedicated to tax reform. Its president, former deputy Luis Miranda (Republicanos-DF), was not re-elected and, so far, a group has not been formed to defend this agenda.

The fronts of the agro and services sectors assess that, at this moment, it is not possible to support the reform in the format of the two proposals presented in the last four years, although they agree that it is necessary to simplify the system.

A new text is being prepared by the Chamber to be presented this semester, providing for different rates, as indicated by deputy Aguinaldo Ribeiro (PP-PB), rapporteur of the proposal.

The two groups are already preparing suggestions to change this report and, if they are not met, they promise to try to change the text in the voting plenary.

“We intend to hold a large meeting soon, promoted by the FPA and the FCS simultaneously, in which we will seek to unify our agendas, mainly in relation to tax reform. We are talking about a very expressive force that represents a large majority of the National Congress “, says deputy Domingos Sávio (PL-MG), president of the FCS and one of the vice-presidents of the FPA.

“Since we still don’t have a new text, we continue working with the position that we are unable to express ourselves in favor of [à reforma].”

Among the obstacles pointed out by the fronts is the fear that there will be an increase in the tax burden for these sectors in favor of the exemption of the industry.

“We understand that the tax system needs to be improved, it needs to be simplified. Now, the way it is, the numbers presented to us are frightening. Trade, services and agriculture would be extremely harmed. We need to understand whether or not we are wrong”, says Pedro Lupion (PP-PR), president of the FPA, citing studies commissioned by the sector.

“We don’t want to be against it. We want to find a path in which it is possible to move forward together. Today, based on what has been presented, it is not possible.”

The federal government has yet to release data on the impact of the tax reform. So far, there is a war of numbers presented by various sectors and specialists, with divergent results.

Deputy José Rocha (União-BA), president of the industry front and vice-president of the FPA, also claims that there are many rough edges to be smoothed over in discussions on the reform. “It is still not very well aligned with the various segments of the economy. So it is difficult to put it to vote”, says the parliamentarian, who highlights that the group has not yet met to reach a position on the subject.

The parliamentarians remember that the members of a front have no obligation to follow the group’s orientation and that, when voting, party orientation and agreements with the government weigh more.

The president of the FPA claims, however, that there are many concerns common to all members of the group. One of them is the possibility that the refund of the tax (cashback) of the basic food basket will not reach all those who need it. Maintaining the exemption for cooperatives and the need to pejotize rural producers are other open questions, but not the only ones.

“In the case of the chicken integrator, for example. Who will pay the tax? Who delivers the feed or who fattens the chicken? “, says the deputy.

“We are talking about the real Brazil, the small producer who does not have the minimum condition or knowledge to make an invoice, a CNPJ, seek professionalization or transformation into MEI.”

There is also distrust among parliamentarians that the government wants to promote an increase in the tax burden on consumption. For the president of the FCS, this could generate political dividends for the Executive, which will have more resources to spend on public policies, but it represents wear and tear that will not be absorbed by Parliament.

“In general, the deputy represents a set of society in which you have all these productive sectors present. If one is being harmed, the charge will come on top of the deputy. Anyone who votes in favor of a tax increase will have a lot of difficulty explain itself on its basis”, says deputy Domingos Sávio.