Lula will use R$ 23 billion to try to attract the support of mayors

President Luiz Inácio Lula da Silva (PT) is going to use R$23 billion to finance paralyzed works in several cities across the country as a way to attract the support of mayors to the text of the federal government’s tax reform. The amount, made possible through the ceiling-breaking PEC approved by the National Congress last year, is seen by members of the Planalto Palace as a way to wave to mayors in a pre-election year.

“It is not possible to imagine that this country will be governed from Brasilia without taking into account the reality of Brazilian municipalities and states. You who know which street is full of holes, which place people ask you to have a work done,” said Lula during a meeting of the National Front of Mayors (FNP), in Brasilia.

In this strategy, the federal government launched a platform where mayors must register the paralyzed works in their municipality. From then on, the expectation is that the Planalto Palace will release funds in accordance with the criteria defined by the Federal Executive. According to the government, priority will be given to equipment aimed at Health, Education, Sports, Culture, in addition to housing units from Minha Casa, Minha Vida.

With the proximity of next year’s municipal elections, members of the Planalto believe that the release of funds for the resumption of works paves the way for expanding support for the government within the National Congress. The assessment is that municipal managers will be able to increase the pressure on deputies and senators for the approval of matters of interest to the Executive.

“The mayor is also interested in having his work done, digging a hole for sewage collection, building a bridge, doing his work. Everyone wants to have their name attached to a work. So, it’s not fair that a president parachuting into a city without taking into account the need for a mayor in that city,” Lula waved.

President of the FNP, the mayor of Aracaju, Edvaldo Nogueira (PDT), celebrated the rapprochement with the federal government. We were never received by the then President of the Republic [Jair Bolsonaro]. And this year, we’ve already been received twice,” said the mayor.

Release of funds involves support for the text of the tax reform

On the other hand, the Lula government intends to seek the support of the mayors for the text of the tax reform under discussion within the National Congress. So far, managers resist the section of the proposal that provides for the end of the Tax on Services (ISS).

The possibility of a decrease in revenue is a concern that mayors have, as the proposals under discussion in Congress replace at least five taxes with a value-added tax (VAT). The following would be replaced: ICMS (state), ISS (municipal), PIS/Cofins and IPI (federal).

According to the president of the FNP, tax reform “cannot harm municipalities”. “ISS is a different tax from ICMS, which has problems, tax war. The world will turn the service sector and this will be the big tax cake of the future”, stated Edvaldo Nogueira.

For the Minister of Finance, Fernando Haddad, the mayors need to balance the effect of the tax reform on the economy as a whole. The head of the portfolio cited projections from the Treasury that would show that the reform will have a positive impact of 20% on the Gross Domestic Product (GDP) over time, which would increase the collection of the Union, states and municipalities.

“When we propose VAT, which can be dual [um para União e outro para estados e municípios] or not, we are proposing a tax that is transparent, fair, simple, that will not reduce municipal revenues in any way”, said Haddad during an FNP event.

Mayors want federal government subsidy for municipal public transport

Fearing attrition with the electorate during the electoral period, the mayors still demand a transfer from the federal government so that there is no readjustment of public transport fares. Just last year, then-president Jair Bolsonaro (PL) even released around R$2.5 billion to municipalities to guarantee free transportation for seniors over 65 years of age in order to relieve the public accounts of local administrations.

According to the mayor of Salvador, Bruno Reis (União Brasil), this is the main demand of the mayors to the Lula government. “We, mayors, make it clear that this is the biggest problem today, that public transport, especially on tires, is bankrupt throughout Brazil, that the account no longer closes, that federal subsidy, support is needed. federal government,” said Reis.

Still according to Reis, Planalto members “received with great sensitivity” the entourage of mayors in Brasília. “We want the subsidy, incentives and tax incentives, special lines of credit for purchasing buses, purchasing electric buses, which is still very expensive, an electric bus is three times more expensive than a normal bus”, he added.

The expectation is that the group of FNP mayors will meet in the coming weeks with the Minister of Cities, Jader Filho, to build an alternative. “We are going to discuss whether this subsidy methodology should be permanent or whether there are other initiatives that the government can adopt, such as tax exemption, support for the purchase of electric buses or changes in legislation”, said the mayor of Salvador.

Along the same lines, the mayor of Aracaju, Edvaldo Nogueira, pointed out that local managers are currently experiencing a “bankruptcy of urban mobility throughout the country, especially those with more than 200,000 inhabitants”. According to him, this scenario is due to the absence of subsidy currently from the federal government for the complementary contribution of municipalities to service concessionaires.

Lula indicated to the mayors that he will work for public banks to lend resources to municipalities that have debt capacity. “If you have conditions, the money will not stay in the bank vault to earn with interest”, defended the PT.