Dissatisfaction of governors makes it difficult to vote on tax reform

The dissatisfaction of governors with the text of the tax reform supported by the federal government is one of the main obstacles to voting on the proposed amendment to the Constitution (PEC) in the Chamber of Deputies. On Monday (3), the President of the House, Arthur Lira (PP-AL), said that the PEC can still be modified and that it will only go to plenary when there is a sufficient quorum.

“There is no passion for the text. Some governors are demanding that they be able to collect taxes and subsequently distribute them. I think the rapporteur Aguinaldo [Ribeiro (PP-PB)] has no problem making changes with legal certainty that bring in more votes. This is not a war between government supporters and the opposition,” he said, according to “O Globo” newspaper.

Who took the lead in the discussion for changes in the proposal was the governor of São Paulo, Tarcísio de Freitas (Republicans), who is against the creation of the so-called Federative Council, a body foreseen in the reform to centralize the management of the Tax on Goods and Services ( IBS), resulting from the merger of ICMS and ISS.

According to Ribeiro’s substitute, the council would be composed of representatives of states and municipalities and would be responsible for collecting the new tax and distributing the revenue to each entity of the federation. One of the premises of the reform is that the tax is collected in the state or municipality of destination of the goods and services, no longer in the source as it happens today.

The governor of São Paulo defends the maintenance of the current decentralized billing system. The idea is that the IBS is collected in the producing state and subsequently passed on to the place of consumption through a clearing house.

According to a presentation given by Freitas to parliamentarians on Sunday night (2), reported by “Folha de S.Paulo”, the measure would ensure greater autonomy for the entities and “direct control of the state over its source of revenue, with more operationalization simpler than the process of centralization and full revenue sharing”.

For this Tuesday night (4) a meeting of members of the Council for Development and Integration of the South (Codesul) and of the Consortium for Integration of the South and Southeast (Cosud) is scheduled in Brasília to discuss the tax reform.

The governors Tarcísio de Freitas (SP), Cláudio Castro (RJ), Eduardo Leite (RS), Eduardo Riedel (MS), Jorginho Mello (SC), Ratinho Júnior (PR), Renato Casagrande (ES), Romeu Zema ( MG), in addition to senators from these states.

To ensure the support of state representatives, the rapporteur of the PEC would be studying, together with the Ministry of Finance, a kind of middle ground between the council’s idea and the compensation chamber’s proposal, according to the newspaper “O Estado de S. Paul”.

One of the alternatives would be the possibility of “withholding” the funds raised to guarantee the reimbursement of the IBS credit to companies and states. Thus, only amounts collected in interstate operations would pass through the clearinghouse, which would make other states less dependent on São Paulo.

There are still other points that are subject to questioning by governors, such as the deadline for transitioning from the current model to the IBS model. By Ribeiro’s replacement, the tax would only begin to be implemented from 2029.

Representatives of the federative units, however, want the process to start three years earlier, in 2026, with a rate of 1%, which would grow until 2032. From 2033, it would start to be charged at the standard rate defined for all entities.

There is also a demand from the states for an increase in the Union’s participation in the Regional Development Fund, intended to offset losses with the reform. The National Committee of Finance Secretaries of the States and the Federal District (Comsefaz) requests that the federal government’s contribution be increased from R$ 40 billion to R$ 75 billion.

Defender of the approval of the PEC, Lira said on Monday that the text is open to modifications. “Whatever is necessary and there is consensus can be changed”, said the president of the Chamber to “Globo”.

To be enacted, the PEC needs to go through two rounds of voting in the House with votes from three-fifths of the House, or 308 of the 513 deputies. If approved, it must still proceed in a similar rite in the Senate, where it will be necessary to obtain 49 of the 81 possible votes.

This morning, former president Jair Bolsonaro, honorary president of the PL, said that his party will guide the bench in the Chamber of Deputies to vote for the total rejection of the PEC on tax reform. For him, the proposal formulated by the government of Luiz Inácio Lula da Silva (PT) will increase the collection of taxes, mainly on the basic food basket.