Lira takes complaints to Lula and demands articulation on Haddad’s agenda – 10/31/2023 – Market

The president of the Chamber of Deputies, Arthur Lira (PP-AL), took to President Luiz Inácio Lula da Silva (PT) complaints from parliamentarians about the lack of compliance with agreements related to vetoes in matters that were processed in Congress and stated that it was up to the Executive to unlock the ICMS (Tax on Circulation of Goods and Services) subsidy proposal.

Considered the main issue for Minister Fernando Haddad’s (Finance) team to increase federal revenue, the project faces resistance among congressmen and productive sectors.

Lira and Lula met on Tuesday night (31). The meeting, which was initially not on the agenda of either of them, had been requested by Palácio do Planalto, interested in ensuring the approval of the government’s priority measures until the parliamentary recess in December.

The meeting would initially only be between the President of the Republic and Lira. Lula, however, also decided to call Haddad, to reinforce the government’s priorities, explaining the need to move forward with measures that increase revenue.

According to reports, the PT member repeated a speech he had made earlier to leaders of the Chamber, stating that it is necessary to approve agendas that are beneficial to Brazil. And he would have heard from Lira that the Chamber has not been silent on matters considered priorities for the country, as well as on the government’s agenda.

Lira has made public statements in this regard. This week, for example, at an event for the new PAC (Growth Acceleration Program) in Alagoas, the president of the Chamber stated that the House “never failed Brazil and the federal government”.

On the other hand, Lira took complaints to the Chief Executive that were dealt with at a college of leaders on Tuesday afternoon and demanded that the government resolve these problems.

Parliamentarians accuse the government of not having minimally complied with agreements signed regarding presidential vetoes on projects that were processed in the Legislature, such as the one that established new rules for the Carf (Administrative Council of Tax Appeals), the fiscal framework and the Guarantee Framework.

In the opinion of House leaders, the Executive vetoed sections that had already been aligned with parliamentarians and members of the federal government. According to reports, there is an assessment that this position ends up weakening the government itself in the eyes of congressmen.

Lula, in turn, responded to Lira that he was not aware of these agreements and reinforced that in his government the pacts made must be fulfilled.

One of the main topics discussed at this Tuesday’s meeting was the ICMS subsidy proposal. Such as Sheet showed, last week Haddad made a request to Lira to speed up the analysis of the proposal, suggesting that the text be considered as an MP (provisional measure), not a bill with constitutional urgency.

The difference in the rite can lead to differences in the collection. The text of the bill foresees the beginning of effects only on April 1, 2024, while the MP establishes an earlier date, starting on January 1.

According to reports, Lira said again this Tuesday that it is up to the government to better discuss the merits of the proposal before dealing with its format, and that Haddad should meet with the leaders of the House to discuss the matter and unravel the project. This is because the text still faces resistance from parliamentarians and businesspeople.

The objective of the project is to close loopholes in the legislation and prevent companies from taking advantage of ICMS benefits granted by governors when reducing the federal tax collection base.

The government seeks to make it clear that such discounts are only valid when the companies’ contributions are linked to investments, not to any expense. The economic team stated at the time of original submission of the proposal that it expected to raise around R$35 billion from 2024 with the measure.

According to what Lira has told interlocutors, the Chamber has already voted on other projects as a provisional measure and, therefore, if there is a consensus on the merits of the project, it will not oppose its processing in a mixed committee (made up of deputies and senators).

The discussion about the procedure for processing the measures has been the cause of an impasse between Lira and the president of the Senate, Rodrigo Pacheco (PSD-MG), since the beginning of the year.

The meeting on Tuesday night took place hours after Lula received the leaders of the Chamber benches of allied parties at Planalto. Representatives of the centrão acronyms that recently entered the government participated: the PP (Lira’s party), which took over the Sports portfolio with André Fufuca; and the Republicans, which nominated Silvio Costa Filho for Ports and Airports.

Lula highlighted on the occasion the importance given by the government to agendas that increase government revenue, adding that the federal government will not cut spending, particularly in investments and social programs.

Last week, in a signal to Lira, Lula fired the president of Caixa, Rita Serrano, handing over control of the bank to the center. She took over in her place a nominee from the President of the Chamber himself, the economist Carlos Antônio Vieira Fernandes.

The head of the Executive had already been telling interlocutors that he intended to engage more in political articulation, with the aim of urgently approving the economic team’s priority agenda.

Lula had said that he would be more present in dialogues with the benches after recovering from surgery on his hip and eyelids.

The meeting with bench leaders, within the so-called Coalition Council, would already be part of this context. Next week, Lula will repeat the meeting, but this time with the Senate’s allied benches.

The approval of measures that increase revenue acquired new weight after the issue of zero fiscal deficit returned to the center of the economic agenda.

The president himself declared, during a breakfast with journalists, that it was “hardly” possible for the government to meet the target set by Haddad. Lula also added that the fiscal deficit target did not need to be zero.

The statement ended up causing a major market reaction, with stock markets falling and the dollar rising. As shown by the Sheetthe government is discussing changing next year’s target to a deficit of 0.5%.

Priorities presented by the government to Congress:

• Tax reform
• Budget Guidelines Law of 2024
• 2024 Budget
• New legal regime for tax credit resulting from subsidies
• End of deductibility of interest on equity
• Transparency, arbitration and private guardianship system
• Brazilian Payment Systems Institutions