Lula government beats taxpayer in most STF and STJ judgments

In his journey to increase revenue and achieve fiscal balance, the Minister of Finance, Fernando Haddad, counted, in 2023, on the “help” of decisions from the Superior Court of Justice (STJ) and the Federal Supreme Court (STF). In at least 16 important tax judgments, the Union emerged victorious in the dispute with taxpayers.

If you consider the discussions involving state and municipal taxes, the score for tax payers becomes even worse: there were 34 victories for public entities in 49 trials, according to a survey by the Machado Associados office, published by the newspaper “Valor Econômico”. Included in the account are theses analyzed in repetitive resources, general repercussions or considered relevant by the authors.

In the first half of the year alone, the Union won ten of 14 tax trials held in higher courts. In a single case, in which the STF authorized the Union to charge IRPJ and CSLL on tax incentives granted by states via ICMS, the potential for additional revenue reaches R$47 billion, according to calculations updated by the Federal Revenue Service.

The STF’s assistance to the Treasury also includes the judgment that relativized the so-called res judicata by “breaking” a decision previously considered definitive on the collection of CSLL. There is no estimate of the potential revenue that the case should generate – the IRS itself considers it a “reduced” tax impact. The decision, however, created a precedent for the possibility of final and unappealable decisions being reviewed, according to experts.

The Supreme Court also formed a majority to guarantee the incidence of federal taxes such as PIS and Cofins on financial income, such as interest, in a ruling unfavorable to banks, securities brokers, credit unions and insurance companies. The impact, for the Tax Authorities, could reach R$119 billion, but the Brazilian Federation of Banks (Febraban) calculates that the debt would be R$12 billion, since several financial institutions had already been paying taxes since 2015.

Among the cases involving the States and the Federal District, is the authorization for the collection of the ICMS rate differential (Difal) from April 5, 2022 – taxpayers argued that the collection would only be valid from 2023. The estimated impact is around R$10 billion.

“It is positive for the country that the Brazilian State has its tax policies ratified by the Judiciary”, said prosecutor Paulo Mendes to “Valor”. According to him, it is a message to companies that the State has been acting within the law and the Constitution. “Imagine if half of Brazilian taxes were unconstitutional. The country would be in chaos.”

In another important decision for the government’s accounts – which, in this case cannot be considered a defeat for the taxpayer –, the STF released the payment of court orders through extraordinary credit, so as not to violate tax rules. The understanding allowed R$95 billion in debts recognized by the Courts to be paid off in 2023 without increasing the primary deficit.

Change in the relationship with courts may have contributed to government victories

The sequence of sentences favorable to the Union can be attributed in part to the change in the relationship between the Executive and the courts. A few days after the beginning of the third term of Luiz Inácio Lula da Silva (PT), still in January 2023, the government established the so-called Judicial Tax Risk Monitoring and Monitoring Council.

The group includes Haddad, the Minister of Planning and Budget, Simone Tebet, and the Union’s attorney general, Jorge Messias. “We are going to act technically in the courts with great force”, said the Minister of Finance when announcing the structure.

Among the Council’s objectives is “to encourage the adoption of solutions designed to strengthen and subsidize the activities of the Union’s judicial representation bodies, its autarchies and its foundations, in monitoring judicial events capable of affecting public accounts”.

Haddad himself spoke directly with members of the 1st Section of the STJ during the trial regarding federal taxation on state incentives. Days later, the group also met with STF minister André Mendonça, to discuss the matter.

In September, the council published a set of measures to “improve the monitoring of judicial tax risks”, which includes, among other actions, “the establishment of joint actions with the Judiciary to resolve disputes”.

In October, after receiving Haddad and Messias, in addition to the ministers of Cities, Jader Filho, and of Labor and Employment, Luiz Marinho, and the president of Caixa, Rita Serrano, the president of the STF, Luís Roberto Barroso, agreed to withdraw from the agenda a judgment on the FGTS correction index that was scheduled for the 18th of that month.

Experts are divided on the government’s dialogue with the STF and STJ

The file divides experts between those who consider dialogue to be “part of the game” and those who see undue interference between different Powers.

“It is well known that in recent years the higher courts have been relativizing the commands contained in the constitutional charter, in order to meet political interests,” he told People’s Gazette Luciano Ogawa, tax lawyer and partner at Ogawa, Lazzerotti and Baraldi Advogados.

Last month, in an interview with TV Cultura’s “Roda Viva” program, the Finance Minister defended that meeting the target of zeroing the primary deficit in 2024 is not the exclusive prerogative of his department and included the Judiciary in the equation.

“It will not be a minister who will be able to deliver a result. I depend on the Judiciary, I depend on the Executive and the Legislative. And so far I can’t complain about anyone,” he declared.

In his crusade against payroll tax relief in 17 sectors of the economy, Haddad has already signaled that he may appeal to the STF to question Congress’ decision to extend the benefit until 2027.

“There is no desire on our part to antagonize. We want a solution. So we will seek help from the Judiciary in this case, but we will also present it to Congress […] an alternative to what was approved”, he said, in December, before the publication of provisional measure (MP) 1,202, which establishes the gradual reburdening of sectors benefiting from the measure.