More radical tax reform would not pass by “interests”, says Haddad

Minister Fernando Haddad, of Finance, said this Wednesday (21) that the current tax reform project under discussion in the Chamber of Deputies could be improved in the future, but that whatever is possible will pass now. The statement was made during participation in a seminar promoted by the National Confederation of Industry (CNI) and the Esfera Brasil group, in Brasília.

Haddad said that he has heard suggestions to make a “more radical” proposal, but that this “would not pass” at this time due to interests that need to be addressed. The discussion in the Chamber is bumping into the resistance of states and municipalities to join taxes such as ICMS and ISS to those charged by the Union, such as IPI, PIS and Cofins.

“We have to be mature enough to point in the right direction, given the relationship of forces, and push the country forward. You will see that, naturally, in the next period, we will be able to have a much more attenuated discussion on the question of what new steps can be taken”, he said in a record by Agência Brasil.

The minister also stated that some sectors of the economy need to be treated “essentially with some specificity”. And he stressed the need to carry out the reform even because of the fiscal rule, which “becomes more difficult” to be managed.

“Brazil has a justice system that spends 2% of GDP [Produto Interno Bruto, soma de todos os bens e serviços produzidos no país]. That’s four times more than the No. 2 in the world. Look at this: 40% of the cost of the court system is tax litigation.”

At the same event, the president of the Chamber of Deputies, Arthur Lira (PP-AL), said that all states need to be included in the reform, and that he will meet on Thursday (22) with governors and state finance secretaries to discuss the theme.

Lira pointed out that issues related to the creation of the Regional Development Fund could be resolved at the meeting. This fund, which is included in the text approved by the Working Group (GT) on Tax Reform, would compensate for the end of the tax war that allows states to reduce ICMS rates to attract investments.

“This question of source, values, division of funds, we hope that it will be resolved or that alternatives will appear”, he added. The expectation is that the project will be discussed in the plenary of the Chamber in the first week of July.