Sesc and Senac: Lula vetoes changes to the S System – 05/30/2023 – Market

President Luiz Inácio Lula da Silva (PT) sanctioned this Tuesday (30) Law 14,592/2023, which deals with benefits to various sectors, such as entertainment, fuel and airlines.

Following an agreement reached with congressmen to approve the text in the Legislative, the president vetoed the articles that provided for the allocation of 5% of the contribution to Sesc and Senac to Embratur (Brazilian Agency for the International Promotion of Tourism).

In the veto message, Lula states that, “despite the good intention” of the measure, it “removes considerable amounts from the budget” of Sesc and Senac “immediately, which may result in damage to some relevant social services provided by System S entities.”

The possibility of allocating resources from the S System to Embratur was the target of a strong campaign against it.

The sanctioned law originates from a provisional measure edited in the Jair Bolsonaro (PL) government, which also incorporates proposals sent by the current government. The text generates a tax waiver of BRL 4.3 billion per year for the Union.

The new law provides for the maintenance of Perse (Emergency Program for the Resumption of the Events Sector) in the same manner adopted during the pandemic for another five years —although with more restrictions on the sectors that can benefit.

The list includes hotels, hostels, campsites, pensions, food services for events and receptions, film production companies for advertising, film exhibition activities, production and promotion of sporting events, in a total of 44 segments benefited.

Only legal entities that already carried out these activities on March 18, 2022 will be able to enjoy the planned tax benefits.

The law also extends until the end of the year the exemption of PIS/Cofins (federal taxes) on diesel, biodiesel and cooking gas.

It also establishes a zero rate for these taxes for the air transport sector for passengers from January 1, 2023 to December 31, 2026. The measure should represent a reduction of BRL 500 million in the costs of Brazilian civil aviation, according to the Ministry of Tourism .

The collection of the same taxes is suspended until December 31, 2023 on purchases in the domestic market and on imports of oil for fuel production.

The law also included MP 1,159, which deals with the exclusion of ICMS from the calculation base for PIS/Cofins credits, and the reissue for 90 days of the special tax regularization program for Santas Casas.

It also changes the rate of remuneration of resources from the FAT (Fundo de Amparo ao Trabalhador) to the BNDES for financing innovation and digitization.

In a note, the CNC (National Confederation of Commerce) recalls that the government had committed to vetoing the articles on the S System so that the MP could be approved before it expired.

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WHAT IS THE S SYSTEM?

Set of entities managed by business federations and confederations, segmented by type of economic sector. They are classified as private and have no administrative link with the government. They offer teaching, training, research and leisure services.

WHERE DOES THE MONEY COME FROM?

From the compulsory contribution of companies, which is collected from workers’ payroll. Some services and activities are paid by users.

WHAT ARE THE CONTRIBUTION RATES ON THE PAYROLL?

They vary depending on the sector: 1% for Senai, Senat and Senac; 1.5% for Sesc, Sesi and Sest; 2.5% for Sescoop; from 0.3% to 0.6% for Sebrae and from 0.2% to 2.5% for Senar.

WHAT VALUE IS COLLECTED?

In 2022, contributions to the S System totaled R$27.3 billion, equivalent to 1.2% of the federal tax burden and 0.28% of GDP.

HOW IS THE MONEY SHARED?

Contributions are collected by the Federal Revenue Service, which is passed on to the entities.

WHICH ENTITIES ARE IN THE SYSTEM?

• Sesi (Industry Social Service)
• Senai (National Service of Industrial Learning)
• Senac (National Trade Learning Service)
• Sesc (Social Service of Commerce)
• Senar (National Rural Learning Service)
• Sescoop (National Cooperative Learning Service)
• Senat (National Transport Learning Service)
• Sest (Social Transport Service)
• Sebrae (Brazilian Micro and Small Business Support Service)

WHERE DOES THE MONEY GO?

Social services (Sesi/Sesc/Sest) develop activities linked to the well-being and quality of life of workers, with centers dedicated to sports, culture, health, food and tourism, for example.

Learning and support services (Senai/Senac/Senat) offer qualification courses (basic to graduate) for workers in these sectors, develop innovation and technology solutions for companies and have startup acceleration programs, among other activities.

Senar and Sescoop act in both functions (social and learning).

Sebrae is the only entity that is not linked to a confederation and its objective is to help micro and small companies and individual micro-entrepreneurs, through courses, consultancy, for example.

HOW DID SYSTEM S COME ABOUT?

Sesi, Senai, Senac and Sesc emerged in the 1940s. From 1990 onwards, the system gained five more autonomous services.

Senai was created by Getúlio Vargas in 1942 and is managed by the CNI (National Confederation of Industry). It emerged with the mission of organizing and administering learning schools for workers in the sector.

In 1946, Senac was created, linked to the trade, services and tourism sector. In the same year, Sesi and Sesc came to implement measures that would contribute to the social well-being of workers in both sectors.

Sebrae emerged in the 1970s, but only entered the S system as an autonomous government entity in 1990. The other entities emerged in the period 1991-2001.

WHAT ARE THE ATTEMPTS TO CHANGE THE SYSTEM?

Several governments, including Dilma Rousseff (2011-2016) and Jair Bolsonaro (2019-2022), have already tried to change the allocation of resources from the S System, but failed in the face of pressure from business leaders, who barred these proposals in Congress.

Former Economy Minister Paulo Guedes, for example, took office defending cuts in resources for interest groups, promising to “stab” the S System, but failed to make his initiatives prosper in Congress.

In 2019, Bolsonaro framed the organizations in the rules of the LAI (Access to Information Law) and forced the entities to detail expenses with salaries and services.

When he commanded the Ministry of Education, in 2008, the current Minister of Finance, Fernando Haddad, managed to make changes to the system to increase the gratuity and the number of vacancies in technical courses of initial and continued formation of four entities.

There have also been attempts to limit the remuneration of entities to the federal employee ceiling (R$ 41,650.92). At Sesi-SP, for example, the disclosed values ​​reach R$ 62,143.

WHAT ARE THE CRITICISMS?

Former senator Ataídes Oliveira (PSDB-TO) wrote the book “A Caixa Preta do Sistema S” in the last decade, criticizing the model, such as the existence of high-value courses, surplus resources invested in the financial market, deviations committed by managers and high remuneration of directors, among other issues. A reform proposal drawn up by the parliamentarian was also barred in Congress.

In 2019, the Attorney General’s Office demanded transparency in the use of money transferred to entities.

Union leaders have presented to the government the claim to increase the representation of workers in the S System, so that they participate in the definition of the entities’ strategies, especially in the area of ​​professional training.