Lira wants to guide tax rule before tax reform and report to PP – 03/22/2023 – Market

Despite the postponement of the announcement of the new rules for public accounts by the Luiz Inácio Lula da Silva (PT) government, the text should gain priority in the Chamber of Deputies and be voted on even before the analysis of the tax reform.

The president of the Chamber of Deputies, Arthur Lira (PP-AL), wants to guide the changes in the tax rules in the first semester, right after the formal submission of the text to Congress.

The rapporteur should be with a parliamentarian from the PP, the same party as Lira. The President of the House stated to the report that at least five deputies of the party are being considered for the rapporteurship.

The nomination had been promised to Deputy Mendonça Filho (União Brasil-PE), but, according to reports made to the Sheetthe failure of negotiations between the party and the PP for the formation of a party federation between the two parties ended up undermining the agreement.

The project must go ahead of the proposal that unites and simplifies taxes on consumption — which, unlike the new framework, is already in process. The two agendas are priorities for the Ministry of Finance.

The government itself admits that the approval of the fiscal rule should be faster. The chief minister of the Civil House, Rui Costa (PT), said this Wednesday (22) that “with certainty” the project will be voted on before the tax reform.

Lira stated that he has given “public signs of strengthening” of the Minister of Finance, Fernando Haddad (PT), in the discussion on the new fiscal framework.

“Haddad is being criticized by the market and the PT. [Se recebe] criticism from both sides, it’s because the text is good”, Lira told journalists on Tuesday night (21).

“We are supposed to have a meeting with all the leaders on Wednesday until [o governo] decided to postpone it until after Lula’s trip to China [o anúncio da nova regra]because he thought it was bad to advertise and travel,” he said.

According to the president of the Chamber, the government has not yet presented projections of the effects of the new fiscal framework in the coming years. As shown to Sheet, there is still uncertainty regarding the parameters that will dictate the future dynamics of expenditures. Therefore, there are still adjustments to be made to the proposal.

The decision on the order of priorities between the two subjects is related to legislative and political issues.

The new fiscal rule will be a complementary bill, which has a simpler procedure in Congress, but requires an absolute majority of votes: 257 deputies and 41 senators, in just one round of voting in each House.

The tax reform is a PEC (proposed amendment to the Constitution), which follows its own processing rite. The text has already gone through committees in the Chamber and is ready to go to the plenary, but, given the perspective of changes, it is currently being debated in a working group.

To be approved, a PEC needs the support of 308 deputies and 49 senators, in two rounds of voting in each House.

In addition, the topic of tax reform is considered more complex. Although parliamentarians, members of the government and businessmen say that there is a consensus on the need to simplify the current system, the minutiae of the proposal stir with the interests of large groups —which become vectors of pressure on Parliament.

The service sector is one of those who fear an increase in the tax burden on the segment, which today suffers a lower incidence of PIS and Cofins, two federal taxes that would be unified in the new IVA (Value Added Tax). Agribusiness has also been a headache in the negotiations, imposing resistance.

Therefore, the assessment of the president of the Chamber is that there is no environment for the tax reform to be voted before the new tax rule.

Parliamentarians of the House affirm that the approval of the new framework, in turn, can give an important signal to the financial market, at a time when the government is expanding its appeals for the Central Bank to cut the basic interest rate, the Selic, today in 13.75% per annum.

Accelerating the bill, in the opinion of deputies, would convey a message of commitment to public accounts that would be beneficial to the image of the government and the country, attracting investors and creating a favorable environment for the BC to relax its monetary policy.

Deputy Silvio Costa Filho (Republicanos-PE) says that Lira has been talking to parliamentarians about advancing the economic agenda.

“There is a feeling that we can prioritize the fiscal anchor. With this agenda approved, we will provide predictability, we will seek to reduce the interest rate and we will have a clear signal for the balance of public accounts, in addition to improving our credit score and Brazil’s image for look for international investments”, he evaluates.

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SEE THE ROUTE OF THE NEW TAX RULE IN THE CONGRESS

Where will the procedure begin?

As it is a supplementary bill forwarded by the Executive Branch, the text will begin to be discussed in the Chamber of Deputies. The House will have the final word on the content, in case the Senate promotes changes during the appreciation.

Where can the proposal for a fiscal rule go through the Chamber?

A complementary bill of law is normally forwarded for analysis by commissions specializing in topics covered by the proposal —called merit commissions. There are also the Finance and Taxation and Constitution and Justice commissions, which can analyze the merits and/or admissibility of complementary bills, that is, whether they are in accordance with budgetary rules and constitutional precepts. All must also pass through the plenary.

Can the project go to a special commission?

Projects dealing with matters relating to more than three merit committees are sent to a special committee, which replaces all others.

Can it be handled urgently?

The plenary may approve a request for the supplementary bill to be processed on an urgent basis. Generally, this depends on the leaders’ agreement. The President of the Republic may also request an urgent vote on a project of his own initiative. In this case, the proposal must be voted on within 45 days, or it will block the agenda of the Chamber of Deputies or the Senate (depending on where it is at the time).

How does the emergency system work?

A project under an urgent regime can be voted quickly in plenary, without the need to go through the committees. The rapporteurs of the proposal in the committees give their opinion during the plenary session. The text is read from the tribune, and there is the possibility of an immediate vote.

What does it take for the proposal to pass Congress?

Complementary bills require an absolute majority of favorable votes, that is, more than half of the members of each House. This means gathering at least 257 votes in the House and 41 votes in the Senate.

What is the final course of the procedure?

A complementary bill sent by the Executive is considered first by the Chamber of Deputies. Then the text goes to the Senate. If there are no changes, the text goes to the presidential sanction.

However, if the senators make changes to the text, the project returns to the Chamber, which will have the final word — the deputies can accept the senators’ changes or restore the text originally approved by the Chamber. After a new vote, the text is sent to the President of the Republic for sanction.

The Chief Executive has 15 working days to sanction the project in its entirety or with partial vetoes in some devices, or even veto it entirely. All vetoes are validated by Congress, which can overturn them with an absolute majority of deputies (257) and senators (41).