The Tax Reform Bullshit – 02/05/2024 – Adriana Fernandes

The Tax Reform Bullshit – 02/05/2024 – Adriana Fernandes


The return of Congress’ work begins this Monday (5) with the dispute for protagonism surrounding the regulation of tax reform on consumption taxes.

The trigger began because the Ministry of Finance created 19 working groups to regulate the text of the constitutional amendment, however, it did not include any representatives from the private sector. None at all.

The groups were installed and the spirits did not cool down. On the contrary, it gave the motto for Congressmen (some of them from the opposition and who voted against the reform PEC) to organize themselves to start the legislative year with the parallel agenda of regulation.

The private sector’s reaction is an indication that regulation may end up taking longer. Without approved standards, the reform will not stand and cannot work in practice.

A point that has not yet come to light, identified by the column, is that a group of parliamentarians wants to take advantage of the PEC’s regulation phase to take away the power of the Revenue and other state and municipal tax authorities to lower standards.

It is expected that the texts will leave Congress without needing so-called infra-legal norms, such as the famous INs (Normative Instructions) from the Revenue. It will be difficult to implement such a system, but this movement is growing.

In June 2021, still in the Bolsonaro government, the president of the Chamber, Arthur Lira, sang this ball by stating that he intended to restrict the role of the Federal Revenue Service in regulating tax laws approved by Parliament.

In a live broadcast organized by Fiesp, he said at the time that, with the changes foreseen in the tax reform, the Tax Authorities “could no longer regulate the laws and release resolutions for their application”.

The desire only increased. For those who are together with Lira in this endeavor, the time has come.

The Extraordinary Secretary of Tax Reform, Bernard Appy, even gains time in drafting the three regulatory projects without listening to the companies’ demands, but he could lose out in negotiations later in Congress.

Appy’s argument is that the “shot is short” — 60 days to deliver the work — because of the tight window of this year’s municipal elections.

Appy said the groups would have the autonomy to invite representatives from the private sector for conversations. So far this has not happened.

An even greater risk would be for the Chamber (where projects begin to be processed) to pass on the text that will be prepared by parallel regulation and leave the government’s proposal in the background.

If these dissatisfactions are not resolved in the coming weeks, there will be problems in the future. Minister Fernando Haddad’s (Finance) strategy of guaranteeing the vote in the first half of the year may not happen, with political and economic costs.

Regulation could be more expensive with new exceptions. The dispute around them did not end with the approval of the PEC. It is now only restricted to technical details. The interests behind each section included, or eventually modified in the vote, will be even more difficult to identify in the complex language of legislative texts.

Parliamentarians opened the doors to entities and associations, as shown on Sunday in the column Panel of Sheet.

The parliamentary fronts for Entrepreneurship, Agriculture, Commerce and Free Market have set up a calendar of five weeks of debates, starting on February 20th. Afterwards, they will present a proposal for a regulatory text.

It was known that the regulation would be a hard stop. Perhaps even bigger than the approval of the PEC. However, tact and prudence were lacking.

It makes sense for the private sector to participate in the discussions. This way, proposals can reach Congress with more consensus.

The reform needs to have the vision of those who charge (the tax authorities of the federal government, states and municipalities) and those who pay (companies and individuals).

The middle ground.

Neither open the negotiation to an endless debate nor exclude the taxpayer from negotiations at this initial stage.

Otherwise, the impression is left that the government is just trying to steamroller using the 19 technical groups.


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