CNI says last-minute amendment to the Reform does not harm – 07/12/2023 – Market

Despite the tension generated by the amendment placed at the last minute in the Tax Reform, which opens a gap for the creation of a new tax by the states, the president of CNI (National Confederation of Industry), Robson Andrade, says that he does not see problems, only solutions, after approval by the Board.

The unexpected amendment, which authorizes governors to charge contributions on primary and semi-finished products to finance state funds, led to apprehension in the iron ore, oil and agro sectors, which fear an increase in the tax burden with an impact on exports. Sectoral associations such as Ibram (which brings together mining companies) are already working together to try to overturn the section in the Senate.

“I understand the position of the rapporteur, Deputy Aguinaldo, that at the last minute he had to make some concessions, some agreements, in order to be able to guarantee the approval of the reform. This ends up not causing much harm”, says Andrade.

According to him, the CNI will work so that, in the Senate, the reform is approved in the same way as it was done in the Chamber.

The CNI was very supportive of the Tax Reform. Once passed in the House, what are the problems that need to be resolved in the Senate?
I do not see any problems. I only see solutions. Approval is a historic moment. All sectors, governors, presidents who passed through the Senate and the House spoke of carrying out the Tax Reform.

You could ask all the governors if they were satisfied with the tax situation in Brazil, and they would say no. AND [se perguntasse] if they wanted reform, they would say yes. But each one had a look more at this or that question. I am not saying that the approved reform was unanimously approved, but it is what could have been done and it was done very well. We are celebrating and focused on helping this approval also happen in the Senate as soon as possible.

What do you think of the amendment that proposes the contribution on primary and semi-finished items to finance state funds?
Of course, at the last minute, some deals had to be worked out. I understand the position of the rapporteur, of deputy Aguinaldo [Ribeiro (PP-PB)], that at the last minute it had to make some concessions, some agreements, in order to be guaranteed the approval of the reform. I think it ends up not doing much harm. These are last-minute deals. Of course, it always has an impact on something, but I think it’s going to be good. I don’t think it will bring any compromise to the reform as a whole.

Does the CNI intend to combat this in some way?
We are in a position to work towards the approval of the reform as it was done in the Chamber. Including, so that she doesn’t have to go back to the Chamber. May it be consolidated in the Senate. Perhaps, some changes can be made without compromising the structure, the framework, of the reform.

Critics say the reform shifts the tax burden, favors some specific sectors. Is this discussion over?
At CNI, we analyze this reform not only from the industry’s point of view. We analyzed it from Brazil’s point of view, because our tax system penalized not only the industry. Even if other sectors had a tax benefit, in the end, it ended up being harmed, because the country does not grow, does not develop, it has difficulty in making international agreements, in attracting investments. As there is no investment, it is difficult to generate employment. So, the CNI looked at this reform with a more country vision, to give the population and society transparency in the payment of taxes, because the consumer is the one who pays taxes.

I think there are some sectors that, first, are looking at their own navel. And they are not seeing what this could bring to Brazil in the medium term. For example, the estimate of the Federal University of Minas Gerais is that the GDP can grow from 12% to 15% in a period of ten years with the reform. It will benefit everyone. So, you may lose a little bit now, but you will have a growth and development benefit. In this study, there is the prospect of generating 8 million jobs in Brazil.

What is CNI’s expectation for the VAT (Value Added Tax) rate?
What we saw that was put in place is a restriction that there can be no increase in the tax burden. That’s the main point. Today, industry pays, just federal taxes, around 34%, and we expect that to drop to around 25%.

What about sectoral exceptions? What should be the impact on the rate?
Of course, in the exceptions, you are talking about sectors such as health, education, public transport. This exists all over the world because they are sectors that serve the population, especially the most needy. Both in health and in education and public transport, you need to have a differential of not burdening these sectors, otherwise, it would really increase the cost for society that we want to privilege.

In your opinion, what can be improved in the Senate?
We are not working with this perspective of improving in the Senate. We had in the past the discussion of two PECs [Proposta de Emenda à Constituição]. The 45th, which started in the House, and the 110th, in the Senate. Today, this proposal that was approved in the Chamber, in fact, has between 60% and 70% of PEC 110 itself. It is a mixture of the two PECs very well prepared.

We are not preparing any proposal to change or amend what was approved in the House for discussion in the Senate. We will support. Now, if the senators present it, there will be some discussion about regional development, about the fund, mainly for incentives for companies that are installed in the North and Northeast. We are open to discuss for sure. But we are not going to prepare any proposal to change what was approved.

How do you see the points that will remain for the supplementary law, such as the issue of credit for the tax?
The complementary law really concerns us. We are going to have to work a lot on this issue because it depends on an unqualified quorum and we are going to have to discuss it. Today society is mature to be able to interfere. What we see is that you can’t put anything down your throat. So we’ll have to discuss. It’s legit. All sectors will have to participate. And we are going to participate defending the industrial sector and job creation.