Why the right failed to block tax reform in the Senate

The outcome of the vote on tax reform in the Senate, held in two rounds on Wednesday night (8), revealed the interference of different factors, which go beyond the simple polarization between President Luiz Inácio Lula da Silva (PT) and the former president Jair Bolsonaro (PL). Both played direct roles in the negotiations, seeking to ensure approval (Lula) or prevent (Bolsonaro) the proposal. The government ended up winning without the expected respite, having to make last-minute concessions. There were just four votes beyond the 49 needed. The score was unfavorable only due to betrayals, federal benefits and regional interests.

The mobilization coordinated by the opposition leader, Rogério Marinho (PL-RN), sought throughout the session to gain enough votes to block the project. At one point, the opposition bench even supported the alternative project proposed by senator Oriovisto Guimarães (Podemos-PR), with a merely symbolic effect, to make a point. After the first round, changes were also made to the text. At all times, Marinho exposed contradictions in the project and the risk of increasing the tax burden, with the Value Added Tax (VAT) having the highest rate in the world, estimated at 27.5%, due to the differentiated regimes (exceptions granted to sectors).

The nucleus most loyal to the former president, in turn, even showed 90% alignment, but also showed divergences between Bolsonaro’s supporters, affected by the influence of regional factors, the actions of business lobbies and, above all, the traditional persuasion by through the granting of federal positions and budget funds. Behind the scenes, it is said that two conservative senators changed their votes for this reason, obtaining favors from Planalto. Planalto’s action involved Lula himself in last-minute approaches and concessions from rapporteur Eduardo Braga (MDB-AM).

Bolsonaro’s entry into the field to block the reform took place with his trip to Congress, phone calls and messages sent to opposition senators. On the other hand, the unexpected creation of a fund with Union resources to compensate the smaller states of the North (Acre, Rondônia, Roraima and Amapá) weighed heavily, in addition to the intense action of ministers and government leaders in search of votes. Despite the benefits announced, senator Dr. Hiran (PP-RR) disagreed with the group of northern senators and voted against, giving in to personal pressure from Bolsonaro.

According to behind-the-scenes reports, the government also negotiated the support of the still resistant Giordano (MDB-SP), Rodrigo Cunha (Podemos-AL), Zequinha Marinho (Podemos-PA) and Nelsinho Trad (PSD-MS). The newspaper O State of S. Paulo caught a message from Bolsonaro on Trad’s cell phone, asking to vote against the reform. Then comes the senator’s response, regretting having already committed the floor by voting in favor, after having a demand accepted. These changes worked against the former president’s efforts. Due to personal retaliation, Senator Irajá (PSD-TO) ended up not attending the plenary, frustrating the government.

Guidance from right-wing leaders was ignored by senators

The leaders of the allied base parties – MDB, PDT, PSB, PSD, PT and União – naturally guided for approval. Those from the opposition parties – Novo, PL and Republicans –, in turn, indicated a no vote.

The PP, whose national president and senator Ciro Nogueira (PI) positions himself as an opponent of the government, released the bench, as did the PSDB and Podemos. Nogueira and senator Laércio Oliveira (PP-SE) voted in favor of the reform. The PP leader in the Senate, former Minister of Agriculture Tereza Cristina (MS), voted against the reform.

Nogueira’s vote in favor may have been a channel of harmony with fellow party member Arthur Lira (PP-AL), president of the Chamber, who wants to advance the reformist agenda. Opposition senator Plínio Valério (PSDB-MA), in turn, went to the stand to inform that he would support the PEC due to the option to maintain subsidies from the Manaus Free Zone.

Those who failed to vote, such as senator Márcio Bittar (União Brasil-AC), indirectly helped the opposition, as the main objective was to prevent the government from reaching the mark of 49 votes in favor. Bittar was also affected by the inclusion of the aid fund for northern states. Government ally, Cid Gomes (PDT-CE), also abstained, as did oppositionist Marcos Rogério (PL-RO). Flavio Arns (PSB-PR) was inclined to support Oriovisto’s proposal, but ended up voting with the government.

Regional aspects prevent parties from closing the issue

For political scientist Ismael Almeida, the contradictions highlighted in the outcome of the vote on the Proposed Amendment to the Constitution (PEC) were predictable, given the complex nature of the matter.

“Tax reform encompasses an intricate network of interests, ranging from the business sphere to the political and federal spheres. In this multifaceted scenario, it becomes challenging for most parties to impose a unified position, given the diversity of interests present,” he noted.

He added that regional aspects and the specific conditions of each senator’s term also exert significant influence, adding extra difficulty to decision-making.

Senator Laércio Oliveira (PP-SE) caused surprise by being one of the two PP votes in favor of the reform. Defender of the commerce and services sector, whose perspective is an increase in the tax burden, he tried to explain his vote to voters surprised by the acceptance of an amendment by senator Eduardo Braga (MDB-AM).

“Amendment 722 of my authorship preserves millions of jobs in commerce. It requires the government to submit a bill reforming payroll taxes within 180 days. The reform of payroll taxes, including its universal exemption, is the way to preserve social security and reduce the increase in the tax burden on services”, stated the senator.

“The exceptions provided for in the reform are important to mitigate the brutal impact it will cause on the market, especially on the services sector. Ideally, the PEC would not be voted on now. It needs to be more thought out and discussed with everyone. If the complementary laws that will regulate numerous issues and that were left open do not have sufficient normative density, the new system will run the risk of being impractical”, commented tax lawyer Daniel Correa Szelbracikowski.

Interestingly, despite clashing with the opposition in recent months, Soraya Thronicke (Podemos-MS) voted against the government reform, as she defended her project from the presidential campaign for a single tax, always associated with her vice-president, the economist Marcos Cintra.