Tebet: ‘Congress wants reform and CPI will become a meme’ – 05/01/2023 – Market

The wave of CPIs that has been forming in Congress should not hinder the process of tax reform and the fiscal framework, according to estimates by the Minister of Planning and Budget, Simone Tebet.

A prominent character in the CPI of Covid in 2021, Tebet predicts that the investigation of the coup acts of January 8 will have an initial showcase with attacks and rudeness, but the exposure will end up reduced to internet memes.

The other CPIs, which will address Americanas, MST and soccer, also have no potential to paralyze Congress, because the opposition itself wants to move forward with the tax agenda, says Tebet.

“This Congress is reformist. It is embracing tax reform, just as it was with the autonomy of the Central Bank and Social Security. That is why things will move forward”, he says.

The minister is also optimistic about the debate on the exclusion of ICMS tax benefits from the calculation base for federal IRPJ and CSLL taxes, to be judged by the STF (Federal Supreme Court). The decision, according to her, will be decisive in bringing in the revenue the government needs and avoiding the presentation of a third package of measures.

Tebet refutes the statement made in the Senate last week by former BC (Central Bank) president Arminio Fraga that the arithmetic of the framework does not close. “It has fat. It has a place to get it from”, says the minister.

Worried about the Selic at 13.75% per year, she reiterates the demand for the BC to address the government’s efforts in writing communiqués and minutes.

How do you evaluate the criticism made by Arminio Fraga last week that the framework account does not close?
There is no antagonism between social commitment and fiscal responsibility. The framework managed to find that balance. With that, I have resources for social programs, but manage to reach commitments in the fiscal area. On the one hand, having a target and saying that Brazil does not spend more than it collects, that is, we are going to have expenditure control, a primary result target and we are going to zero out this account next year. On the other hand, as we will always spend less than the real increase in revenue, it will impact, in the medium term, Brazil’s debt in relation to GDP.

With that, it does its homework in the fiscal aspect to, already with the approval of the framework, make it clear to the Central Bank that there is no longer any justification for interest of 13.75%. There are ‘n’ internal and external factors that impact inflation. Of the inmates, many no longer exist. Of all the fears that people had of an expansionist government in terms of spending, the fiscal framework puts a limit on this within a government that was legitimately elected with a clear social project.

The signal that the economic team is giving to investors and BC is: we are going to fulfill President Lula’s campaign commitments, but within what fiscal responsibility allows.

Many are looking at the framework through a primary outcome lens. [Eles dizem:] You will not be able to eliminate the deficit if you do not increase revenue. First, we are not going to increase revenue by creating taxes or increasing the rate. We are going to do this by combating tax evasion, inspecting and seeking revenue that was lost.

The framework is a piece of gear. The silver bullet is tax reform, which has never been more ripe for approval. I believe it will be approved in the first semester by the Chamber. And there are other credit measures.

In the economic aspect, the government is very firm in its purposes. Now we need to understand the moment Brazil is going through. It’s a more polarized country, we don’t have a majority in Congress and we can’t make mistakes in what’s easy. There are certain guidelines that need to be seen and revised in the light of a government that is not part of a particular party. It’s a broad front. Then we have to make gestures.

Which? One of them is for agribusiness. Have a well-defined Crop Plan. Ensure predictability. There is no legal security with agrarian conflict in a country that produces and exports commodities.

We have to advance on guidelines that serve both sides. On the one hand, it is important to demarcate indigenous areas. But it is important to understand that the Constitution gave a deadline to demarcate, which was not met. So, it is no longer fair to remove those who have title to the land empty-handed, without payment in cash. We need to move forward with this change in the Constitution, allowing landowners who have fair, peaceful and peaceful possession of private areas that do not involve the Amazon to receive cash in advance. And that land is returned to the original peoples. It’s questions like these that can be resolved. The challenge is to pacify.

Nor is it possible to accept invasion of productive areas.

We have to find fiscal space to guarantee the settlement plan for family farmers. I work in agriculture and I am aware that what produces fruit and vegetables in Brazil is family farming. She needs to be strengthened. It is enough to have political will and not have ideology in the process. Not wanting to bring guidelines simply to conflict. And the president is aware, he is aware of this.

He was worried about MST invasions. How is this relationship with the agro? He understands the side of the settlers in the sense that people want the space to produce. But the feeling I have is that he understands that we are living in a moment in which Brazil has changed. Society itself does not accept invasion of productive areas. I cannot speak for him. I didn’t talk to him about it, but the feeling I have is that the president knows he has conditions to pacify and resolve this land issue that they are starting now.

We are looking in the rearview mirror to fix arms, environmental and social setbacks. Now is where the government begins. I believe that the government is aware of this and should already be talking to its specific ministers about this.

Still on the tax collection issue, the government has already had a sample of the pressure. In the case of US$ 50 for foreign sites, it retreated. How to deal with it? It retreated in form, not content. It’s just going to be more work and homework. Not changing the legislation, but strengthening inspection.

In addition to this case, there are weeping on all sides, aren’t there? Going along the lines of Arminio’s statement that the account does not close, the main point of the framework is that he puts a brake on spending. If you spend R$ 1 more, you have to report to the Court of Auditors, to Congress, and there is a problem of responsibility in court. The issue is not the goal. To achieve this, I need to increase the revenue myself. But to meet the framework, I don’t need to increase revenue in terms of spending. I can only spend 70% of what I raise. So, I will have to increase to be able to fulfill the social ones. Otherwise, I’ll have to reduce each a little. It is this positive impact on the interest rate and debt/GDP ratio.
On the other hand, as it is a government that has social concerns, it puts a hot potato in the lap of the Treasury and in ours, which is the following: if you see it, find revenue without raising taxes.

And in Brazil, there is a lot of revenue that is either withheld, or it was electoral exemptions from the past government. In one of them, we solve half the problem with this STF decision [sobre os benefícios do ICMS]. It will be decisive for us not to have to think about a third package. The first package went out back there, with PIS/Cofins reenactment, spontaneous report at Carf. The second is the one that will tax electronic bets.

It is not easy to reencumber after the benefits and incentives have been given, but the tax reform also makes a drag and solves a large part of the problem with tax spending.

And what about the re-encumbrance of gasoline, which also caused the PT to shout, and came with the temporary tax on oil exports? It was a decision by the economic team, because re-encumbering everything would have an impact on inflation. But it was done. The tax is temporary. It’s part.

There are so many waivers, meaningless exemptions, tax evasion. It’s a chaotic tax system. And the side of the glass half full is where you can look for a recipe. If you can’t change the US$50 law, then tighten enforcement. It has fat. There’s a place to get it. This arithmetic thing that Arminio talked about is the following: from where? He said that the account, for the time being, is not closing, because we have not yet presented where the revenue will increase from. But it will be increased because we have alternatives to replace it.

The government has priority in the framework and in the tax reform, but there is a wave of CPI coming. What does your experience say, of someone who stood out in CPI? My experience, from a long time in Congress, is that we are in a different moment. It’s the beginning of a government, and CPIs usually happen at the end, which paralyzes the public machine.

These CPIs are far from the reality of the Brazilian people. They won’t have this protagonism, this showcase, and with that paralyze Congress, as it was in the pandemic. Everyone was indoors, desperate for a vaccine. There was nothing else but to watch the CPI.

I won’t even consider CPI of Americanas, that doesn’t give the impact. The biggest one, which is on the 8th of January, may be of interest to those of us who have a real idea of ​​the risk we are running, but a large part of the population is concerned about jobs and food. I would say that 70% of the population is not worried about the CPI. It is even tired of polarization. I think it will have an initial exposure and then it will fall into fatigue, personal attacks, rudeness. What won’t be missing are memes. I hope I am wrong, and that this is not a showcase to embarrass us, that there is urbanity.

The opposition is more liberal, so it has an interest. This Congress is reformist. Tax reform is currently on the agenda of Congress. He is taking over, as it was with the autonomy of the Central Bank, the pension reform. So things will go.

At the Senate meeting last week, Ms. made a strong speech about the consequences of the BC’s decisions. Does this speech raise the tone? I am in favor of BC autonomy. The decisions are technical, but the communiqués and the minutes, like any administrative act, are a political act. They have to direct and talk about the real Brazil. You have to put what the government is doing. You have to signal: look, the framework is coming, this is positive. I’m not seeing that gesture. I see very tough announcements. And an act that, later, when you pick it up, it comes flexible. It can’t be like that.

As much as these are technical decisions, the BC has to understand that, as monetary policy, just like fiscal policy, it is focused on ensuring a macroeconomic environment that allows Brazil to make public policy and fulfill its social commitment. You have to have a macroeconomic view from the perspective of the HDI, of regional inequality. This mapping has to be part of the process.

The difference between poison and medicine is in the dose. So, 13.75% is doing well or badly? If it’s so bad that businesses close their doors and industry doesn’t hire people, I’m killing the patient, who is society.

Mrs. has one of the three votes in the National Monetary Council. Thinking about changing goals? Inflation targeting is a non-discussion. Any one of the three that mentions an inflation target creates a very serious problem and increases inflation the next day.