Haddad says he was not warned by Pacheco about tax relief for municipalities

Minister Fernando Haddad, of Finance, stated this Tuesday (2) that he was not warned by the President of the Senate, Rodrigo Pacheco (PSD), that he would maintain the payroll tax exemption for municipalities after the revocation of the provisional measure sent by the government to Congress at the end of last year.

Pacheco decided this Monday (1st) to extend the validity of the measure for another 60 days, but let the section dealing with the reimbursement expire. As a result, municipalities will continue to pay an 8% tax rate on their payroll against the 20% intended by the government – ​​the measure should directly affect Haddad’s goal of eliminating the deficit in public accounts this year.

Haddad said that he spoke with Minister Alexandre Padilha, of Institutional Relations, about the provisional measure, but that this specific point regarding the municipalities was not addressed.

“He [Pacheco] spoke with the minister [Alexandre] Padilha [da Secretaria de Relações Institucionais]. Minister Padilha called me, but I hadn’t talked about it with him. I prefer not to comment without knowing better what procedure was adopted, because the provisional measure had already been received with that agreement to remove the 17 sectors and process it through a bill with constitutional urgency”, the minister told journalists earlier.

Fernando Haddad said that he will talk to Padilha again to “better understand” what happened, and that a project is already being processed in the Chamber to “partly remedy this problem”.

The “problem” mentioned by Haddad concerns the issue of municipalities, payroll tax relief and Perse, the Emergency Program for the Resumption of the Events Sector.

“You set a primary result goal and forward the laws that will give consistency to that goal. And the work we are doing with Congress is to convince parliamentarians that we need to find a source of financing for the expenses created. Expenses were created in the previous period that require a source of financing”, pointed out the minister.

Haddad says that he is negotiating with Congress to pass the laws proposed by the government, but that this “fixing of public accounts” requires a commitment from the Three Powers. “The Executive is a Power, but today the other two Powers have a lot of protagonism when it comes to holding this meeting of accounts”, he added.

Rodrigo Pacheco stated in the decision that, according to the nineteen rule — a period of 90 days for a tax change law to take effect —, city halls would begin to suffer the effects of the measure this Tuesday (2).

“The decision means that the discussion on the issue of payroll tax relief and its possible new model must be fully addressed by bill, and not by MP. We are open to rapid discussion and the best and fairest model for Brazil”, said the president of the Senate, in a statement.

In December, the government issued the first MP to reburden the payroll of 17 sectors of the economy and municipalities. After pressure from parliamentarians and affected sectors, the Executive gave up on reimbursing companies. However, the municipalities had been maintained in the text.