Lira is the biggest winner of the approval of the tax reform

Arthur Lira (PP-AL), the president of the Chamber of Deputies, emerged as the big winner of the approval of the tax reform by the House on Thursday night (6), which occurred quickly and with a wide margin of votes: 382 in favor, well above the required 308 and beyond expectations.

After 11 hours of debates, the session that lasted until dawn also registered a comfortable score in the approval of adjustments to the text (379 votes in favor) and in the second round (375 votes in favor).

For analysts and politicians consulted by the People’s GazetteLira consolidated its power by succeeding as the main articulator of tax reform, overcoming resistance from governors, productive sectors and party leaders.

“In this sense, Lira becomes a figure of symbolic importance equivalent to that of Lula in the Republic,” said political scientist Leandro Gabiati, from Dominium Consultoria.

The approval of the reform was attributed in part to changes made to the Proposed Amendment to the Constitution (PEC) by rapporteur Aguinaldo Ribeiro (PP-PB) in recent days. But the release by the government of R$ 5.3 billion in parliamentary amendments hours before the vote weighed heavily.

Lira won important support for the PEC, leaving important politicians fearful of suffering isolation. He excelled at mediating discussions and shaping outcomes. His action led many to give in and negotiate, recognizing the imminent risk of approval of the reform. In addition, Lira went to the plenary tribune to emphasize the importance of the technical debate, asking deputies to abandon ideological positions and the dispute between opposition and situation.

This Friday, speaking after the approval of the reform in two shifts, Lira said: “In this legislative effort, last night (7/7), in a historical fact, in the first major tax structuring reform in the country after redemocratization, the House of Representatives Deputies fulfilled their role”.

Reform yields political gain for Haddad greater than that of Lula

President Luiz Inácio Lula da Silva (PT) benefited from the advancement of a complex and strategic agenda for his administration. Within the government, however, the greatest victor was the Minister of Finance, Fernando Haddad, who led, alongside Lira, the negotiations for PEC 45/2019, a proposal that is now on its way to the Senate. There, the debate will focus on the federal issue, until final approval this semester with possible adjustments.

Head of Lula’s economic team and named as a potential presidential candidate, Haddad sees the approval of the tax reform as a personal asset. That’s because he treated it as a government priority this year and committed to its articulation. In this process, the head of the economic team sought to position himself as a conciliator, leaving the Legislative as responsible for the PEC.

This stance earned it reputation gains in the market and facilitated consensus with the actors involved. “After decades, we democratically approved a tax reform. It seemed impossible. It was worth fighting for,” he said.

Tarcísio’s support for the PEC irritates Bolsonaro

By insisting on trying to stop the reform, Jair Bolsonaro and the bench of his party, the PL, were isolated and politically defeated. In the end, 20 of the 99 deputies on the bench, the largest among the parties in the Chamber, voted in favor of the proposal, contrary to the former president’s orientation. Those who voted against the PEC demarcate how far his influence goes.

Arthur Lira tried to contact Bolsonaro to seek a retreat, but had no response. “Congratulations to the 20 PL deputies who voted like me in favor of the reform, which is not from the government, but from Brazil”, said deputy Luciano Alves (PSD-PR) during the second round of voting.

The PEC approved in the Chamber creates the Tax on Goods and Services (IBS) to unify the ICMS (state) and ISS (municipal) and the Contribution on Goods and Services (CBS) to gather federal taxes PIS, PIS-Import, Cofins and Cofins-Import.

According to the proposed model, it will be up to the Federative Council to manage the IBS. The rapporteur met the demands of governors, led by the governor of São Paulo, Tarcísio de Freitas (Republicans), to improve the composition and routine of the collegiate and the management of the Regional Development Fund (FDR), which will have resources of up to R$ 40 billion.

Tarcísio’s opening in favor of the reform, signaled alongside the Minister of Finance, Fernado Haddad, with whom he met on Wednesday (5), served to launch the vote. Upon leaving the meeting, Tarcísio said that he agreed with 95% of the proposal and would not be an obstacle to its approval. His gesture generated serious discomfort with Bolsonaro and with the opposition parliamentarians closest to him.

This tension was explicit during the PL meeting on the morning of Thursday (6), with the lines of disagreement between Tarcísio and the former president spreading in videos on social networks. On the eve, the party of the governor of São Paulo closed the question for the PEC. Rapporteur Aguinaldo Ribeiro considered Tarcísio’s support a “serene and democratic position”.

By taking a critical, but not intransigent, position, the governor of São Paulo aimed at the reform’s gains and expanded his political independence from the right-wing portion most linked to Bolsonaro.

The former president, in turn, by placing himself 100% against the reform, was dependent on legal questions and unlikely negative repercussions on the market after its approval. The PL bench will have to internally digest the dissent. The leaders of Centrão, the majority group in the Chamber, were able, in turn, to show their strength and weight for votes in the interest of the government.

Senator Flávio Bolsonaro stated that there was no fight between his father and Governor Tarcísio. “It is obviously a friendly atmosphere and one seeks unity of speech. This is common within allied parties. Obviously, from the moment that some people film something that is being debated there with frankness, each one putting his point of view, this ended up being exploited as a form of division on the right and I want to publicly say that this does not exist”, he said.

Experts see errors in Bolsonaro’s strategy

According to political scientist Leandro Gabiati, the assessment of the approval of the tax reform goes beyond the simple clash between government and opposition. “This became evident when an important group of opposition governors supported the approved text”, he said. He noted that the portion of the opposition that was more ideological and aligned with Bolsonaro tried to label the PEC as something merely pro-government, but it was worn out.

On the other hand, the governor of São Paulo, Tarcísio de Freitas (Republicans), was deeply involved in the negotiations and reaped political benefits. “Tarcísio presented himself as a new reference for the opposition, willing to seek solutions and negotiate on behalf of other governors, which also makes him a great national leader”, he said.

However, Gabiati highlighted that the main highlight of the approval of the reform was Arthur Lira, as he courageously led the process, facing direct clashes and leaving his personal mark on it. The expert argued that Lula missed the chance to politically take advantage of the approval of the reform by choosing not to lead the process, leaving the merits to Lira and Haddad, in that order of importance. “In any case, Lula ends the first semester well and can explore the idea that he managed to pass a reform much more challenging than the issues he will have to deal with for the rest of the year”.

Economic agenda brings less chance of eroding the Plateau

Arthur Wittenberg, professor of government relations and public policies at Ibmec-DF, considered that Bolsonaro was the main political loser in approving the reform, due to a primary strategic error. “Even knowing that the PT has been more likely to reach consensus on economic issues aimed at advancing the country’s competitiveness, Bolsonaro opted to oppose something with a high probability of being approved, even ignoring the topic under discussion,” he said.

The result was, then, the defeats in both aspects. In addition to witnessing the approval of the proposal with a wide margin of votes, he caused a shock within the PL bench and in the alliance with the governor of São Paulo, his former minister Tarcísio de Freitas. His party, which has the largest number of deputies, was unable to prevent the vote in the Chamber and even exposed internal disagreements.

“The former president should not have started a fight at a time like this and could even take ownership of the process, remembering that the discussion of the reform had already advanced during his term and that he would like to contribute to improving the proposal”, he commented.

According to Wittenberg, by adopting an extreme oppositional stance, Bolsonaro tried to show his political capital to block initiatives, while his leadership should be directed towards other areas, such as customs and not economic issues, unless they involve statist issues.

Historical defender of tax reform, deputy Luiz Carlos Hauly (Podemos-PR) recalled that the issue had been discussed by the Chamber for over 30 years. He pointed out that the current system punishes the consumer and its alteration will “take Brazil away from wild capitalism towards a real and civilized market economy, with investment attraction”, he said. He said he expected that, at first, the risk assessment of the country’s debt should drop and the gross domestic product (GDP) double in 15 years.