Proposal likely to undergo adjustments, but Republicans, Liberal Party and Brazil Union signaled willingness to support proposal; Chamber speaker wants a vote by Friday
06/07/2023
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2023/8/A/8pe10eSzCJfLSlAzDhFg/06pol-200-tributa-a8-img01.jpg)
Tarcisio de Freitas and Fernando Haddad — Foto: Diogo Zacarias/Divulgação
Republicans, Liberal Party (PL) and Brazil Union signaled on Wednesday that they could give a significant number of votes in favor of a tax overhaul after mayors and São Paulo Governor Tarcisio Gomes de Freitas step up efforts to have the proposal passed in Congress.
The governing coalition is also mobilized, reinforcing the more optimistic scenario for the analysis of the report by Deputy Aguinaldo Ribeiro, which was adjusted Wednesday night to win new supporters. The moves happened after the Executive branch authorized R$2.1 billion in congressional earmarks, the highest amount released in one day this year. The goal of Chamber of Deputies Speaker Arthur Lira is to pass the matter in plenary by Friday.
Mr. Gomes de Freitas began the day at the Ministry of Finance, where he met with Minister Fernando Haddad. When he left, he said he agreed with 95% of the proposed tax overhaul. “São Paulo will be a partner in the passage of the reform,” he told reporters alongside the minister. “Our suggestions are easily adaptable.”
He again advocated a “better governance” for the federal council proposed in the draft, and that the rules be included in a proposal to amend the Constitution (PEC) under discussion – and not later, in a supplementary law. The council will take care of the new tax on goods and services (IBS), a unification of ISS and ICMS, respectively municipal and state taxes. Mr. Gomes de Freitas and other governors advocated some kind of compensation to avoid revenue losses, but have come to accept that the council’s operating rules can ensure greater balance in the decision-making process.
“If I have a looser governance, I need the revenues more in the hands of the state,” he said, reiterating that a “more representative” governance is necessary.
According to him, the proposal to implement a clearinghouse “is an alternative,” but would cause a battle. “If we improve governance, we can move to a more decentralized administration. If governance is worse, it makes sense for us to work with a clearinghouse. I think the government agrees with that.”
Mr. Haddad emphasized that although Mr. Gomes de Freitas has made “several considerations,” the governor has also “manifested himself in favor of the reform,” even if São Paulo has “challenges in the short term.”
Subsequently, the governor participated in meetings with leaders of other parties, including PL, the party of former President Jair Bolsonaro. The leadership and a more moderate group of the party, which has 99 deputies, prefer to negotiate changes in the draft rather than try to make the reform unworkable.
There is a possibility that the party will let deputies vote as they wish if the rapporteur responds to the requests of the governors and makes adjustments in his opinion. “We opposed the original text. If they change the text according to what the governors say, and if we realize that progress has been made, some party members may support it,” said Deputy Altineu Côrtes, a leader of PL.
After the governor of São Paulo showed support for the tax overhaul in case of changes in the opinion of the rapporteur, federal deputies of his party, Republicans, decided to support the proposal. Mr. Gomes de Freitas told his allies that he saw “a concrete possibility” of moving the matter forward in the lower house. As a result, the party, which has 40 deputies, declared its full support for the proposal.
“We have agreed on this matter. Of course, some technical points that the government presented, if they are met by the rapporteur, we will unconditionally support the reform,” said Marcos Pereira, the party’s president and Chamber’s deputy speaker.
At the end of the day, the leader of Brazil Union in the Chamber, Deputy Elmar Nascimento, said the party, which has 59 deputies, will support the reform. “We will not be neutral, no. We will support it,” he said. He did not want to say how many deputies will support the matter. The proposal is opposed by Goiás Governor Ronaldo Caiado, who is a member of the party.
The National Confederation of Municipalities (CNM), which represents 5,202 cities, released a manifesto stating that 98% of the country’s municipalities will see an increase in revenue over the next 20 years if the proposal is passed. The position contrasts with that of the National Front of Mayors (FNP), which brings together the leaders of capitals and large cities and on Tuesday asked deputies to vote against the proposal.
Mr. Ribeiro accepted CNM’s proposals, such as the possibility of updating the IPTU by decree, the application of the IPVA tax to water and air vehicles, and the parity between governors and mayors in the federal council of the new tax.
*Por Raphael Di Cunto, Marcelo Ribeiro, Estevão Taiar — Brasília
Source: Valor International