Tax reform is not a political toy, says Lira – 7/6/2023 – Market

Minutes before the first round of voting on the tax reform, the president of the Chamber of Deputies, Arthur Lira (PP-AL), spoke in defense of the measure against “unfounded criticism”, stated that the approval of the text is not a “political game” and said that approval will go down in the history of the country.

Lira also reaffirmed that her candidate in the elections was Jair Bolsonaro (PL), but asked that the polls and ideological disputes be left aside in favor of the proposal.

“The elections have already taken place, the winners are in power. I remind you that my candidate lost the presidential election. Let’s leave the polls aside, let’s turn our eyes to the Brazilian people. Tax reform is not a political game, tax reform is not an instrument political bargain, tax reform is not a party-political battle,” he said.

Lira gave the speech from the pulpit and not from the mayor’s chair. He stated that the approval of the text makes the deputies go down in history.

“Let us not allow ourselves to be carried away by unfounded criticism, by hasty analyzes by those who never wanted a tax reform that would change the face of the country,” he declared.

And he appealed to his “friends” to vote in favor of the measure. “The Chamber of Deputies needs and will fulfill its historic role, we will leave here with our heads held high. I am sure, and I convey this to you, that we will have the recognition of the nation. We will write our names in history”.

UNDERSTAND THE TAX REFORM ON CONSUMPTION

extinct tributes

• IPI (federal)

• PIS (federal)

• Cofins (federal)

• ICMS (state)

• ISS (municipal)

tributes created

• CBS (Contribution on Goods and Services), at the federal level

• IBS (the Tax on Goods and Services), of state and municipal competence

• Selective tax (on products harmful to health or the environment)

Rates

There will be a single rate as a general rule (to be defined) and a 50% reduction for the following sectors:

• education services

• health services

• medical devices and accessibility for people with disabilities

• menstrual health drugs and products

• public road, rail and water transport services

• agricultural, fishing, forestry and vegetable extractive products in natura

• agricultural inputs, food intended for human consumption and personal hygiene products

• national artistic, cultural, journalistic and audiovisual productions

Other reductions that may be made by supplementary law:

• Exemption for public transport

• Reduction of 100% of the rate for medicines and medical devices for people with disabilities, in addition to vegetables, fruits and eggs

• Reduction by 100% of the CBS rate levied on Prouni

• Annual revenue limit of BRL 3.6 million so that individual or legal rural producer may not pay IBS and CBS

Cashback

Funds

• Text creates National Fund for Regional Development, with Union resources for states, to reduce regional and social inequalities

• Text provides for the Sustainability and Economic Diversification Fund of the State of Amazonas, with Union resources and managed by it (to be created and detailed by complementary law)

• Establishes the Compensation Fund for Tax Benefits or Financial-Tax Benefits, intended to offset benefits to companies that are compromised after reform, with annual transfers from the Union to states from 2025 to 2032, starting at R$ 8 billion and reaching a peak of BRL 32 billion per year

Federative Council (which will manage IBS) composed of:

• 27 members, representing each state and the Federal District;

• 27 members, representing municipalities and the Federal District (14 representatives based on the votes of each municipality with equal value for all, and 13 representatives based on the votes of each municipality weighted by the respective populations)

Source: Version of PEC 45 presented on July 6, 2023.