Senate Committee postpones vote on payroll exemption

The senators of the Economic Affairs Committee (CAE) postponed, this Tuesday (17), the vote on the extension of the payroll tax exemption. The bill had a collective request for parliamentarians to analyze the proposal for longer.

The project is expected to be discussed again next week. The proposal’s rapporteur, senator Angelo Coronel (PSD-BA), rejected all changes made to the text by the Chamber of Deputies, especially in the municipalities’ social security contribution rates.

“A new reduction proves to be unreasonable, given that the financial-actuarial balance of the General Social Security Regime must always be sought and that there are currently more pressing situations for directing possible rate reductions – for example, the drastic situation of fiscal fragility in municipalities”, said the senator in the report.

Angelo Coronel removed from the text the reduction in social security contributions for all municipalities, which was included by the Chamber in August after approval by the Senate in June. There was a plan to reduce rates for cities with up to 142 thousand inhabitants, which would have the tax reduced from 20% to 8% of civil servants’ salaries.

The Chamber, however, extended the reduction to all municipalities with progressive rates depending on GDP (Gross Domestic Product) per capita.

The benefit to municipalities was added to the original project that provides for the exemption of payroll taxes in 17 sectors of the economy until December 31, 2027. In this regime, companies replace the 20% social security contribution on employees’ salaries at a rate of 1% to 4.5% on gross revenue.

If the Senate’s original version is restored and approved, the text could go straight out of the committee for presidential sanction. The project only returns to the plenary if a senator requests an appeal.

At the time, the approval of the project by the Senate was harshly criticized by Finance Minister Fernando Haddad, who said he did not understand the reason for the “rush” in voting on the extension, as the deadline only expires at the end of the year. He stated that there is a specific discussion about this in the second phase of the income tax reform, which should be proposed later this year.