Government cannot throw away the opportunity this year – 03/29/2024 – Adriana Fernandes

It is a cliché to say that Minister Fernando Haddad (Finance) is racing against time to deliver tax reform regulatory projects. But there is no other alternative to take advantage of the voting window before the municipal elections.

Congress will stop in July until the election, unless the president of the Chamber, Arthur Lira (PP-AL), manages to maintain a strong voting pace for regulation — which, in today’s scenario, is not the best option. likely.

Lira, who will choose the rapporteurs for the projects, also counts on the regulation of the reform to influence the negotiations surrounding the election of his successor as president of the Chamber.

After the municipal elections, other political configurations may be formed and, depending on the results of the polls in the parliamentarians’ electoral strongholds, their power in tax reform may decrease.

On the other hand, the president of the Chamber has been asked to give more space for debate in the processing of regulatory projects, which will also be difficult to guarantee precisely due to the tight schedule that he and Haddad have set: approving the reform by the end of the first semester .

It is not even guaranteed that the government will be able to meet the schedule agreed with Lira to deliver the projects by April 15th.

The proposals being prepared by the 19 working groups will still have to be screened by the government’s legal department before reaching Congress. It is not an easy process. It is necessary to correct wording errors in the constitutional text that opened gaps for legal doubts.

There is also no decision yet on the number of projects that will be sent, although Haddad expressed a preference for combining the proposals into two projects, instead of four.

The possibility of regulation by June, therefore, becomes more difficult every day. The presentation of alternative projects to the reform complicated the processing process.

The government and tax experts who participate in reform regulation discussions minimize the strength of these projects written at the drop of a hat.

However, these projects will work with the deputies’ strategy of creating difficulties to obtain a prominent role in negotiations during votes.

There are already three projects presented. The first makes it difficult to implement the Selective Tax on goods that are harmful to health. The second deals with the review of long-term contracts. Agribusiness deputies presented a third project to define the products in the basic basket that will have taxes zeroed.

Here and there you can hear voices that it is better to leave everything until after the elections. There are also those who want to postpone the regulation until 2025 with an eye on a Congress already under new leadership.

Some of these voices are in the government itself, to the astonishment and surprise of the economic team, which has put all its chips on regulation this year as the main topic of Congress’s economic agenda.

Postponing regulation for longer also means postponing the second phase of tax reform: income taxes.

If there was previously a consensus in the presidential elections about the need to return to taxation of profits and dividends obtained by company shareholders, resistance to the measure is now beginning to show its face.

The government cannot miss the idea of ​​taxing dividends, which seemed on track, and throw away the opportunity to carry out the reform. Approving the regulations in the first half of this year is a bold but necessary goal.

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