Tax reform: 90% of cities will win, says Haddad – 06/03/2023 – Market

In an offensive to advance the tax reform in the National Congress, the government of Luiz Inácio Lula da Silva (PT) said this Monday (6) in a meeting with leaders and base deputies that 9 out of 10 municipalities will increase their participation in the total collection , according to a study carried out by the Ministry of Finance.

Led by the minister of the portfolio, Fernando Haddad (PT), the leader of the government in the Chamber, deputy José Guimarães (PT-CE); the PSB leader, deputy Felipe Carreras (CE); and the leader of the Republicans, Hugo Motta (PB). Also present were the coordinator of the tax reform working group, Reginaldo Lopes (PT-MG), and the rapporteur Aguinaldo Ribeiro (PP-PB), among others.

The material distributed by the Treasury to the parliamentarians states that all states and municipalities will have more resources with the approval of the tax reform, and says that the less developed ones will be the most favored.

“With the reform, 90% of the municipalities, which represent 62% of the population, will increase their participation in the total collection. And, with the growth of the economy, all municipalities will benefit and will have more resources to invest in benefits for their population” , says the text.

The presentation delivered to the deputies also argues that the unification of PIS/Cofins, ICMS, ISS and IPI taxes in a IVA (Value Added Tax) will make taxation fairer.

“The poorest people will have a lower tax burden, as they will receive back taxes paid (cashback from the people),” he says. “All states and municipalities will have more resources, but those less developed will be the most favored”, he adds.

The presentation is part of a government effort to improve communication on the subject and to increase adherence to the proposal.

This Monday, the president of the Chamber of Deputies, Arthur Lira (PP-AL), told businessmen that the government will not have the facility to approve the “so talked about, so difficult and so distressing” tax reform, an issue that depends on changes in the Constitution. .

“We are going to pursue the possible reform in tax matters. We are going to have to walk slowly. Nobody is going to reach the ideal reform”, stated Lira.

In the document distributed by the Treasury to deputies, the government emphasizes that VAT is adopted by more than 170 countries in the world to tax consumption and that Brazil is the “only relevant economy” that still “separates the taxation of goods from the taxation of services”. .

“The objective of the meeting was to have the dimension and knowledge of the main points and the calendar that is necessary for the approval of the reform and the dialogue that we need to have so, when it is voted on, we have the security that it will be approved”, he said. Guimaraes.

After the meeting, the leadership of the Chamber and members of the government reinforced that the objective is to vote on the tax reform by the end of May. Members of the working group that analyzes the proposal are preparing a seminar on the subject for the second week of May, which should be the last event before being submitted to plenary.

“I think this is the right moment, we are all convinced that a reform is carried out in the first year of government […] As far as all of us are concerned, we will make every effort to approve the tax reform that Brazil needs and what the Brazilian people deserve”, said the rapporteur for the tax reform, deputy Aguinaldo Ribeiro (PP-PB).

Conversations have been restricted to formal and calendar issues. According to the rapporteur, negotiations on the merits of the tax reform should take place from now on.

“We are going to start discussing the merits now. This meeting [com o ministro Fernando Haddad] it will serve precisely so that we can narrow the whole discussion”, said Aguinaldo.

The leader of the government in the Chamber, José Guimarães, stated that the federal entities and society will be heard. “We are overcoming that stage of disbelief, ‘oh everyone says and nobody approves and nobody does'”, he said.. “Well we are going to do it, because the tax reform is in Brazil’s interest.”

The Extraordinary Secretary for Tax Reform at the Ministry of Finance, Bernard Appy, is coordinating the discussions on the subject in the folder. He is one of the creators of one of the PECs (proposed amendment to the Constitution) under discussion in Congress.

In an interview with Sheet, Appy stated that the unification of taxes on consumption is the pillar of the reform. The rate, however, is the big question in the discussions and will depend directly on the sectoral exceptions to be negotiated in Congress.

“The more exceptions there are, the more favored treatment for sector X, Y or Z, the higher the basic rate has to be in order to maintain the tax burden. What will the rate be? The rate is the one that maintains the current tax burden”, it says.

The final text must be constructed from two PECs: 45, by Deputy Baleia Rossi (MDB-SP), which replaces five current taxes (PIS, Cofins, IPI, ICMS and ISS) by a Tax on Goods and Services (IBS ); and 110, from the Senate, which proposes a merger of taxes —one of the main differences in relation to 45 is that the simplification results in two taxes, not one.