Tax framework: see the step-by-step process until approval – 03/30/2023 – Market

The text of the bill for the new fiscal rule is not yet ready and begins to be written after the validation of the proposal by President Luiz Inácio Lula da Silva on Wednesday (29).

According to the Minister of Finance, Fernando Haddad, the forecast is that the draft will be completed over the next few days to be officially presented to Congress next week.

“If there is any issue that has not yet been addressed, we have time to resolve it until it is forwarded to the National Congress, because it begins to be written after the decision that the President took yesterday. The teams are already mobilized for this. next time there is no session in the Chamber and in the Senate, so we are going to take advantage of this moment to send the clearest and most transparent text that can be written”, said the minister.

With the protocol text, the government will be able to incorporate the new rules to the LDO proposal (Budget Guidelines Law) of 2024, to be presented by April 15.

The project for the new rule, in turn, will begin processing in the Chamber of Deputies, where it should be analyzed by the committees and then by the plenary. If approved, the text will go to the Senate.

If the Senate changes the version approved in the Chamber, the project will return to the plenary of the deputies, who will have the final word on the content.

After delivering the project for a new fiscal framework to Congress, the government intends to present a package of measures on the revenue side.

“We have a lot of work to do. After this complementary law, which goes into Congress next week or the next, we have a set of remedial measures [elevar a arrecadação]”, said Haddad when announcing the bases of the new fiscal framework.

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SEE THE ROUTE OF THE NEW TAX RULE IN THE CONGRESS

Where will the procedure begin?

As it is a supplementary bill forwarded by the Executive Branch, the text will begin to be discussed in the Chamber of Deputies. The House will have the final word on the content, in case the Senate promotes changes during the appreciation.

Where can the proposal for a fiscal rule go through the Chamber?

A complementary bill of law is usually forwarded for analysis by commissions specializing in topics covered by the proposal —called merit commissions. There are also the Finance and Taxation and Constitution and Justice committees, which can analyze the merits and/or admissibility of supplementary bills, that is, whether they are in accordance with budgetary rules and constitutional precepts. All must also pass through the plenary.

Can the project go to a special commission?

Projects dealing with matters relating to more than three merit committees are sent to a special committee, which replaces all others.

Can it be handled urgently?

The plenary may approve a request for the supplementary bill to be processed on an urgent basis. Generally, this depends on the leaders’ agreement. The President of the Republic may also request an urgent vote on a project of his own initiative. In this case, the proposal must be voted on within 45 days, or it will block the agenda of the Chamber of Deputies or the Senate (depending on where it is at the time).

How does the emergency system work?

A project under an urgent regime can be voted quickly in plenary, without the need to go through the committees. The rapporteurs of the proposal in the committees give their opinion during the plenary session. The text is read from the tribune, and there is the possibility of an immediate vote.

What does it take for the proposal to pass Congress?

Complementary bills require an absolute majority of favorable votes, that is, more than half of the members of each House. This means gathering at least 257 votes in the House and 41 votes in the Senate.

What is the final course of the procedure?

A complementary bill sent by the Executive is considered first by the Chamber of Deputies. Then the text goes to the Senate. If there are no changes, the text goes to the presidential sanction.

However, if the senators make changes to the text, the project returns to the Chamber, which will have the final word — the deputies can accept the senators’ changes or restore the text originally approved by the Chamber. After a new vote, the text is sent to the President of the Republic for sanction.

The Chief Executive has 15 working days to sanction the project in its entirety or with partial vetoes in some devices, or even veto it entirely. All vetoes are validated by Congress, which can overturn them with an absolute majority of deputies (257) and senators (41).