Pacheco dehydrates MP from the Lula government and maintains exemptions for municipalities

The president of the Senate, Rodrigo Pacheco (PSD-MG), decided to maintain the payroll tax exemption for municipalities with up to 156 thousand inhabitants, which had been revoked by provisional measure (MP) 1,202/2023. This Monday (1st), Pacheco extended the validity of the MP for another 60 days, but left the section that dealt with the reimbursement of the sheet to expire. As a result, these municipalities will have to pay 8% of the payroll, instead of 20%, as determined by the federal government in the proposal.

The deadline for analyzing the measure, published in December, began to run in February, with the return of Congress’ work. With Pacheco’s decision, only the provisions that canceled the exemption from company payrolls (already revoked in February by MP 1,208/2024) and the exemption from city hall payrolls lost their validity, informed the Senate Agency.

In the decision, Pacheco argued that, according to the nineteen rule — a period of 90 days for a tax change law to take effect —, city halls would begin to suffer the effects of the measure this Tuesday (2).

“The decision means that the discussion on the issue of payroll tax relief and its possible new model must be fully addressed by bill, and not by MP. We are open to rapid discussion and the best and fairest model for Brazil”, said the president of the Senate, in a statement.

“But, in fact, an MP cannot repeal a law enacted the previous day, as if it were another round of the legislative process. This guarantees predictability and legal certainty for everyone involved”, added Pacheco.

In December, the government issued the first MP to reburden the payroll of 17 sectors of the economy and municipalities. After pressure from parliamentarians and affected sectors, the Executive gave up on reimbursing companies. However, the municipalities had been maintained in the text.