Senate opens doors to tax delay conspiracy – 07/08/2023 – Vinicius Torres Freire

The Senate wants to leave its “mark” on Tax Reform. That’s fine, as long as it’s not to shoe the cattle, which is actually cruelty, and to win favors for certain types of companies and for governors and mayors. That is, all those people who say they want reform, as long as it doesn’t exist: as long as all the special regimes for companies and the freedom of governments to do stupid things, confusion and favor with taxes continue.

Some senators want to get their hands on tax changes, taking advantage of bad ideas already circulating in the house. Another number of them are Bolsonarists and want to overthrow the reform for pig spirit. The reform is at risk in the Senate.

For example, leaving the “mark”, the fingerprints, can mean a stab in the heart of the renovation.

In the Chamber’s reform, what was supposed to be a single VAT became a dual VAT (one federal, one for states and municipalities). There will be three types of rate, general, reduced (by 60%) and zero. There are people in the Senate who want to create three messed up IVAs, with various tax rates.

To make matters worse, several sectors with strong lobbying have already managed to embark on the reduced rate. In addition to not making economic sense, favoring groups of companies will increase the general rate. It is easy to see that, maintaining the tax burden, if some pay less, others will pay more.

There is a queue of companies waiting for a reduced rate. Anyone who had the patience to follow the public hearings on the reform in the Chamber will have noticed the joke: everyone wants the Tax Reform, as long as it does not exist, it will be repeated. That is, they claimed a special regime for themselves. President Luiz Inácio Lula da Silva himself does not seem to understand the reform or wants to distort it for another reason: he wants special regimes for automakers or who knows what else.

The heart of the constitutional amendment of the reform is the standardization of taxes, the end of the hallucinatory regional variation and the value of the rates; the end of cumulativeness (tax levied on tax). It is a fundamental reform that affects a large part of the national tax burden (more than 38% of the total taxes collected in the entire country).

There are indications that the Senate may open the door to the delay conspiracy. That is, companies that complain about the “Brazil cost” but that, in general, want to maintain their special regime, their tax exemption, their subsidy, their protection against foreign trade, their oligopoly. In short, they want someone to finance the support of their business via taxes or rents. The backward elite. Majority.

In the end, this is how the most lunatic and cheesy tax system on the planet is invented, confusing, full of litigation, expensive and which, instead of encouraging companies to decide on investments based on economic returns, encourage everyone to dig their little tax favor with the king or queen of the moment.

The result is inefficient investment and low productivity for the company: low economic growth, apart from the growth of money in the pockets of those who manage to gain favor. Someone pays the bill, directly and indirectly.

There is something to be corrected in the Chamber’s reform: how to limit and make operational the regional compensation funds and those favored by the fiscal war; the time of transition from IBS; the functioning of the Federal Council. The main thing, however, is to get rid of exceptions as much as possible.

What is heard in the Senate and even in the Planalto, however, is finding a way to favor sectors, increasing the opportunity for governors and mayors to create bad taxes and even the constitutional novelty of creating taxes.

It was too good to be true. Tax Reform was finally under way. Now you can take a step further, on the edge of the precipice.

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