Senators want a role in tax reform

Classified by the Minister of Planning, Simone Tebet, as the “government’s silver bullet” to revive the economy, the tax reform follows slowly in the special commission of the Chamber of Deputies. In order not to lose the leading role in the elaboration of the project that will still be voted on by the deputies, senators seek to anticipate the discussions and influence its final design.

In order to make the tax reform subject of debates in the Senate this month, Senator Marcelo Castro (MDB-PI) asked the President of the House, Rodrigo Pacheco (PSD-MG), to open spaces on the agenda dedicated to the subject in the non-deliberative sessions from Thursdays. “We need to feel the pulse of society on this urgent measure and prepare to face it,” he said.

Castro considers the reform a clear priority for the federal government and Congress in 2023, suggesting, therefore, that its discussion among senators should not be postponed. “We have an anachronistic, backward, complex tax system that largely allows evasion”, he recalls. For him, the main problem is tax collection concentrated on the poorest.

Senator Oriovisto Guimarães (Podemos-PR) has made the same appeal. At the meeting of the Committee on Economic Affairs (CAE) on Tuesday (9), he complained about the secondary role of the Senate compared to the Chamber, particularly when it comes to structuring projects. “I have a proposal for a constitutional amendment (PEC 46/2022) that may be an alternative to tax reform”, he stressed. He argues that the issue could begin to be discussed by CAE, in preparation for dealing with the government’s proposal.

Despite defending the urgency of the reform, sectors fight to avoid losses

During a meeting with directors of the Competitive Brazil Movement (MBC), Senator Confúcio Moura (MDB-RO) highlighted the importance of the reform for Brazilian development. “Brazil’s tax structure is bureaucratic and uncompetitive, which harms the country in relation to other places where taxation is much fairer and more humanized,” he said.

Report by People’s Gazette revealed that since March an informal group of ten senators has been having periodic meetings with each other and with sectorial groups to prepare itself technically and gather subsidies for the reform. Retail trade and agribusiness have been acting alongside these parliamentarians to prevent the expectation of raising the tax burden on these sectors from being confirmed.

Rodrigo Pacheco, in turn, has renewed his commitment to approving the tax reform in the first half, considering the consensus around the urgency of the measure, in addition to being “the will of Brazilian society”. He emphasizes that, while “it was already known what needed to be done” in relation to social security and labor reforms, there is a great challenge with regard to taxation due to the divisions it raises.

“The Brazilian State does not want to collect less and the taxpayer does not accept paying more tax. There are divergences in the public and private sectors and we will have to make choices in the spirit that everyone has to give in a little”, said the President of the Senate at an event at the Federation of Industries of São Paulo (Fiesp), on May 8.

Difficulties on the part of the government create obstacles to the approval of the project this semester

Analysts heard by POV Gazetteo assess that the Planalto is not yet ready to take the tax reform debate forward, even recognizing its strategic importance for the economy and governance.

For Públio Madruga, director of EGA Distrito, the reform commission in the Chamber will only be relevant when the questions about the government base in Congress are resolved. Otherwise your discussions will be null and have no chance to evolve. “The government will have to start negotiating better and choose which fights it wants to get involved in changing the tax system. The fiscal mark, in theory, would be the main subject now, but it is in the background thanks to unnecessary discussions”, he explains.

Juan Carlos Gonçalves, coordinator of the Ranking of Politicians, makes a similar analysis and stresses that Planalto is going through a “big squeeze” to form its base within Congress. “The rapporteur for the fiscal milestone, Deputy Claudio Cajado (PP-AL), will, for example, have to make important changes to the text and the government will have to keep quiet,” he said. While the new spending control rule does not move forward, government leaders will have to continue holding “a reform without consensus or vote”.

Professor of Government Relations at Ibmec-DF, Arthur Wittenberg, believes that the tax reform, a priority for the industry, will be approved in the wake of the approval of the fiscal framework. His expectation takes into account the immediate effects of this rule for the economy as a whole, which is of special interest to the government, in addition to giving a precise estimate of the impact of the tax reform, reducing doubts on the matter.

Wittenberg is not sure, however, about the degree of support that President Luiz Inácio Lula da Silva (PT) will give to the tax reform. “It is important to point out that the debate surrounding the change is much more complex than the fiscal framework, as it encompasses varied and conflicting sectoral and government interests,” he said.

Finally, he recalls that there is an assessment that, if the reform is not approved in the first semester or at the beginning of the second, it may become unfeasible, considering that 2024 is the year of municipal elections.