Carf and framework votes get stuck with reform in sight – 07/06/2023 – Market

The votes on the PL (bill bill) dealing with the CARF (Administrative Council of Tax Appeals) and the new fiscal framework got stuck in the Chamber of Deputies amid political negotiations between the Legislature and the Executive and the priority given by parliamentarians to the appreciation of the reform taxation in plenary.

Leaders of the so-called centrão subtitles take it for granted that the analysis of these two matters will be left for August, after the parliamentary recess.

But, according to government interlocutors, there has still not been a concrete signal to the economic team that the voting on the matters will be for next month.

At the Treasury, there is an understanding that the fiscal framework is already well underway, while the possible postponement of Carf is a cause for concern. Planning, in turn, discusses a way out for the preparation of the PLOA (Annual Budget Bill) if the vote on the new fiscal framework is not concluded this week.

Amidst the stalemate in the negotiations, Minister Fernando Haddad (Finance) meets this Thursday afternoon (7) with the President of the Chamber of Deputies, Arthur Lira (PP-AL), and party leaders at the official residence of the presidency of the Chamber.

Such as Sheet showed, the government has focused its efforts on trying to unblock the processing of the two projects, prioritizing them in relation to the tax. For the economic team and palace assistants, the two proposals have preference in the order of government priorities, although the reform is also considered a strategic agenda.

The possible postponement would represent a defeat for the government, since the matters are considered a priority in the economic agenda. Resuming the Treasury’s tie-breaking vote in CARF tax dispute judgments is considered a structuring measure with relevant weight for tax collection.

Deputies from Lula’s base (PT) claim, since Tuesday, that the obstacles in the Carf text have already been solved and there are those who bet on the appreciation of the text between the first and second rounds of voting on the tax reform.

The Planalto Palace is still working to have both projects analyzed this week, but political articulators are aware of the difficulties.

Lira has indicated to allies that he is taking care of the negotiations around the tax reform – and that it would be up to party leaders to follow up on other matters. He, however, does not rule out voting on the projects this week.

In an interview with GloboNews on Wednesday (5), Lira said that “the main focus of Congress is tax reform”, which should be voted on Thursday night.

According to parliamentarians aware of the negotiations, the government tries to accommodate PP and Republicans in spaces in the federal machine. Although part of these parties consider themselves opposition, the government tries to honor another wing that supports Lula in order to retain the votes. Deputies target the ministries of Social Development and Sport.

According to reports, if the polls were postponed to August, there would be time to unlock the negotiations during the parliamentary recess.

To interlocutors, the rapporteur of the Carf project, deputy Beto Pereira (PSDB-MS), has stated that the text is ready, but that it would now be necessary to continue the political negotiations between the federal government and the Legislative, which includes positions and amendments.

These negotiations were discussed at a meeting on Wednesday (5) at the Planalto Palace between ministers Rui Costa (Casa Civil) and Alexandre Padilha (Secretary of Institutional Relations) with leaders and José Guimarães, leader of the government in the Chamber.

Carf’s vote is necessary to make it possible to vote on the fiscal framework, a less controversial issue that would put an end to the spending ceiling. The project is being processed on an urgent basis and has been blocking the agenda since the last day 21.

Even opposition parliamentarians admit that the text should be approved and at least with most of the changes proposed by the Federal Senate, which expanded the exceptions to the new fiscal rule and benefited the government.

Despite this, rapporteur Claudio Cajado continues to advocate that the Chamber resume its original report and put an end to the changes proposed by the senators.

The point of least consensus is the exclusion of expenses with science and technology, included by Senator Omar Aziz (PSD-AM), which may end up being rejected by the deputies.

The exception to Fundeb and the Constitutional Fund has a good chance of also passing the Chamber, as does the creation of conditional credit of R$ 32 billion —a Planning proposal articulated by Minister Simone Tebet and Senator Randolfe Rodrigues.