Reform: Lira plans to vote after support from parties – 7/5/2023 – Market

The president of the Chamber of Deputies, Arthur Lira (PP-AL), started the discussion of the PEC (proposed amendment to the Constitution) of the tax reform in the plenary of the House on the night of this Wednesday (5).

After gaining support from parties and the governor of São Paulo, Tarcísio de Freitas (Republicans), the rapporteur, deputy Aguinaldo Ribeiro (PP-PB), presented a new version of the text, which includes changes in the transition to the new tax system and the creation of a National Basic Basket.

The presentation came with the disarming of one of the main knots of the discussion. After picking up a fight with other states for changes in the tax reform, Tarcísio started to admit the centralized collection of the new tax that will replace the state ICMS and the municipal ISS —a format previously opposed on the grounds of loss of autonomy.

The flexibility of his position helped to pave the way for the negotiations to advance. The reform also won declarations of support from leaders of parties with relevant representation in the Chamber, including União Brasil, Republicanos and the PT itself.

The improvement in the climate occurs amid the release of resources by the government of Luiz Inácio Lula da Silva (PT) to irrigate parliamentary amendments and the intensification of negotiation of positions in the Executive.

Tarcísio had been one of the most vocal critics of the proposal to leave in the hands of the Federative Council —to be made up of representatives of states and municipalities— the task of collecting and distributing the resources of the IBS (Tax on Goods and Services) created from the taxes state and municipal levels achieved in the reform.

The governor of São Paulo went so far as to say that the model would be an affront to the autonomy of the states and proposed another mechanism, in which each state would collect the tax at the source (where the companies are installed) and then transfer it to the destination locations (where the consumption) through a clearing house.

The proposal gained support from states such as Rio de Janeiro, Pará and Goiás, but faced criticism from governors, mainly in the Northeast. In recent days, Tarcísio ended up being practically isolated in defending the clearinghouse model, rejected by most states, by specialists and by the federal government itself.

This Wednesday (5), the governor of São Paulo had a meeting with Minister Fernando Haddad (Finance) and, after the meeting, said he would not turn the issue into a “workhorse”.

“The clearinghouse is an alternative, it’s not a workhorse either, [algo] it needs to be like that. As we improve the governance of the Federative Council, we can move towards a centralized administration. If governance is worse, then it makes sense for us to work with a clearing house”, said Tarcísio.

Alongside Haddad, he admitted to accepting that the body be left with the attribution of collecting the new tax, provided that there is a change in the composition rules of the Federative Council to strengthen the states of the South and Southeast regions, which are a numerical minority in relation to North and Northeast. The request is that this guarantee be in the PEC.

“We agree with 95% of the reform. When we proposed the clearing house, what was the logic? The concern with the governance of the Federative Council. If I have looser governance, I need more revenue in the hands of the State. From the moment I improve the governance of the Federative Council, I can have something more ‘algorithmizable'”, he said.

The governor also said that the considerations made are “one-off issues” and that it is “very easy” to build an understanding between the parties. He even placed São Paulo as a “partner” in approving the tax reform.

Tarcísio expressed the change of view after seeing little reverberation of his defense by the clearinghouse. On Tuesday (4th) night, governors from the South and Southeast did not show enthusiasm with this proposal during a meeting in Brasília.

The governor of Rio de Janeiro, Cláudio Castro (PL), said that the state would not fight for a decentralized collection model in the reform and that this was a demand presented by São Paulo. The governor of Rio Grande do Sul, Eduardo Leite (PSDB), also said that he prefers the centralized management model because it is “more efficient”.

In addition, the governor of Ceará, Elmano de Freitas (PT), said after meeting with the Minister of Institutional Relations, Alexandre Padilha, that the Northeast Consortium is closing a letter in support of tax reform.

The federal government celebrated Tarcísio’s repositioning and considered the act a demonstration of commitment to reform and willingness to dialogue. Beside him, Haddad stated that the governor placed national interests above regional and party issues. The minister also said that the Federal Executive seeks to approve the tax reform with “wide margin” in the Chamber of Deputies.

“We are not here aiming at the number of votes to approve. We want to exceed the minimum number to pass the idea on, as much as happened with the fiscal framework, which is a country project that is in progress”, he added.

As it is a PEC, the matter needs the vote of 308 deputies in two rounds in the plenary of the Chamber to be approved and go to the Senate.

Haddad also received the governor of Amazonas, Wilson Lima (União Brasil), who asked for a compensation fund with resources for the state with eventual losses resulting from the reform.

“We came here to present some proposals, such as, for example, a fund that can make this compensation so that the state can continue making its investments in essential areas, such as health and education”, said the governor, who was accompanied by the parliamentary group amazonense at the meeting.

After the morning negotiations, Lira said in an interview with GloboNews that the discussion of the tax reform in the Chamber would start later that same afternoon. Voting would start the next day, Thursday (6).

Appreciating the reform in the first week of July is a promise made by Lira when the proposal’s guidelines were released on June 6. That’s why a breakthrough this week is so important for the mayor.

According to him, however, the details are still being fine-tuned. “We have to give the plenary time so we don’t have an insecurity vote. Let’s hear who is against, who is in favor, the rapporteur, to clarify doubts about all aspects. We will always look for alternatives to build majority consensus”, continued Lira .

He posted on a social network that the reform should not be turned into a party-political battle and that the topic should not be used to gain momentary notoriety”. politicize the reform” and that it needs “to be above government and opposition”.

Even parties from outside the base are joining the reform movement. The national president of the Republicans, deputy Marcos Pereira (SP), announced that the party closed the issue and will “unconditionally support” the text. The statement was given after a meeting of the bench in the Chamber with Tarcísio.

He stated that suggestions were made and that the reporter for the matter signaled that they would be accepted. Pereira said, however, that if this does not happen, the party may back down.

“We closed the question. Obviously some points that the governor presented here, technical points. If these points are taken care of by the rapporteur, we will then give our unconditional support and that is why we closed the question for this very important matter, since the governor of São Paulo led this process” , he said.

“When we verify the text, in this being what was agreed, we will be closed to the question for this theme. If it is not answered, obviously we will be able and we will have the faculty and freedom to review our position”, he continued.

Tarcísio himself should have a meeting this Thursday with former president Jair Bolsonaro (PL), whose minister he was, to try to dissuade him from directing a vote against the PL reform. With the release of the bench, the party could give 30 to 40 votes in favor of the proposal, about a third of the contingent of 99 deputies of the party.