The chorus of governors against tax reform grows – 07/03/2023 – Panel SA

Governors want more time to discuss tax reform. The first to complain was Ronaldo Caiado, governor of Goiás. Then, Mauro Mendes (MS).

Behind the scenes, the screams are louder. Governors, such as Tarcísio de Freitas (São Paulo) and Cláudio Castro (Rio de Janeiro), work together with the state benches in Congress so that the project is postponed to the second half.

They say they don’t want it to be approved on a cash basis and consider that losses will be high without guaranteed compensation mechanisms.

São Paulo and Rio, whose economy is very concentrated in the service sector, are concerned about possible layoffs and, as a consequence, loss of income.

Last Friday, São Paulo entities linked to the sector met with the governor. Although publicly Tarcísio defends the reform, he considers that there are important points to be discussed.
For this reason, sectorial entities began to complain to the federal government, especially the Ministry of Finance.

On Saturday (1), for example, Abras, the supermarket association, met with Minister Fernando Haddad to deliver a study showing that items in the basic food basket will be charged due to the increase in taxes provided for by the reform.

Governors of the Northeast and North criticize the creation of the federative council, which will be managed by representatives of the states, the Federal District and municipalities. This body will centralize the collection of the new IBS (Tax on Goods and Services), a tax that unifies the state ICMS with the municipal ISS.

For them, the council will have powers that go beyond tax collection. You can, for example, make compensations and distribute the result to states and municipalities. There is also the prerogative of being able to issue infra-legal norms, in addition to taking care of administrative litigation with taxpayers. In short, the governors believe that there will be a concentration of resources in populous areas, the Southeast and South.

Mauro Mendes (MS) and Caiado (GO) want to discuss a longer period for the regional funds, which today finance infrastructure projects, to be maintained for more than twenty years, as foreseen in the reform. Pará and Mato Grosso share their claim.

The question, however, is to know to what extent they will be able to block the project. The mayor, Arthur Lira (PP-AL), called the government’s project to himself and decided to put it to a vote later this week.
At the end of his term, the assessment in Congress is that Lira must approve him. Otherwise, it would be a defeat not only for the Lula government, but also for him.

With Diego Felix

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