It was never a tortoise: tax reform and equality between tax administrations – 01/05/2024 – What tax is this

PEC 45/2019, on tax reform, was enacted on December 20th. A historic moment that, naturally, was prominently portrayed in the national press. Some of these records, however, contained information that as part of the reform, a “jabuti” was approved: the equivalence of the salary ceiling for state and municipal tax auditors to the Union ceiling. There is no taxonomic classification capable of supporting the fact that a tortoise is the Highlight 15 approved in the vote on PEC 45. We explain.

“Jabuti”, in national political jargon, is when a topic unrelated to the original text is inserted into a legislative proposal just so that it can piggyback and be approved without much fanfare in the middle of a project. It is a subterfuge, a path to the approval of measures that are indefensible in the sunlight.

This is definitely not the case with equality between Tax Administrations. It doesn’t look like a tortoise, it doesn’t smell like a tortoise.

Let’s look first at the shape. The provision for a single salary cap was incorporated into the tax reform in the Senate through an amendment accepted by the rapporteur and approved in the Plenary. When the text returned to the Chamber, the new rapporteur chose to delete this section. A Bench Highlight was then presented so that the issue could be assessed separately. The Highlight was debated in the Plenary, the leaders took the vote and guided their benches, each one according to their judgment and conviction. A transparent and republican political process. Television, even. No relationship with nocturnal tortoises.

Let’s now get to the substance of the project. By proposing a true revolution in the Brazilian Tax System, PEC 45 did not limit itself only to tax legislation. It was necessary to go further and take care of the collection system, also dealing with administrative issues, such as the functioning of the IBS Management Committee.

A change that is responsible for one of the most disruptive and necessary changes in the Brazilian tax system is the one that alters the working paradigm of tax administrations. Bodies that currently operate based on the competition generated by the tax war will begin to act in an integrated, coordinated and collaborative manner. It is essential to the new model, therefore, that all these agents are subject to the same rights and duties.

The measure approved in Congress finds perfect support in the Federal Constitution, which does not establish distinction between the levels of the federation by stipulating that Tax Administrations are activities essential to the functioning of the State, with precedence over other areas, including the permission to link revenue.

Finally, it is important to clarify that increasing the ceiling does not automatically change auditors’ remuneration. All entities must have specific laws for the career, approved in their parliaments, with the exclusive initiative of the head of each Executive Branch. Therefore, the approved device does not arbitrarily interfere with state and municipal structures. There is, in fact, an increase in the autonomy of these entities, which, following their legislative processes, will be able to define the salaries of Tax Auditors without artificial restrictions, such as political ceilings.

In the same transparent way that we defend equality throughout the processing of the Tax Reform, we will continue to defend its importance and relevance, rejecting the attempt to give its processing a surreptitious character. The tax reform is an advance for Brazil and the approved equality is a condition to make its operation viable.

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