Motion received 308 favorable votes; final decision expected this Tuesday

08/13/2024

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Alexandre Padilha — Foto: Cristiano Mariz/Agência O Globo

Brazil’s Lower House of Congress approved on Monday the urgency motion with 308 votes in favor and 142 against to expedite the processing of the bill that establishes the rules for the operation of the management committee of the future Goods and Services Tax (IBS), according to the text of the tax reform regulation sent by the government to the Legislature. The merits are expected to be considered this Tuesday.

The vote was part of the Lower House’s so-called “concentrated effort” to advance strategic agendas amid the tight schedule imposed by the municipal elections.

Earlier, before the vote, the minister of Institutional Relations, Alexandre Padilha, said that the government wants to convince parliamentarians to treat the regulation of tax reform as the “central issue” of this concentrated effort. According to him, the current administration will “do everything” to complete the discussion of this topic by the end of 2024.

“We hope to vote on the second bill regulating tax reform this week. The government will do everything to complete the regulation of tax reform. I trust the willingness of the Lower House speaker and Senate president to leave this as a legacy. We will work to make this a central issue in the concentrated effort,” he said.

The second regulation project for the reform defines the rules for the body that will be responsible for managing and overseeing the consumption tax for states and municipalities. The first text, which addresses the general rules of the new consumption tax system, was passed by the Lower House in July and is now under review by the Senate.

According to the text being analyzed by the Lower House, this committee will consist of a Superior Council, subordinate bodies such as the General Secretariat and the Internal Affairs Office, as well as an Executive Board—comprising nine directorates.

Additionally, the body will have 27 members, representing each state and the Federal District, appointed by the head of the state and district Executive branch. There will also be another 27 members, representing the municipalities and the Federal District, appointed by the heads of the municipal and district Executive branches. These members will serve a four-year term.

The text also stipulates that the management committee will hold mandatory meetings every three months, with the possibility of convening extraordinary sessions when necessary.

The proposal also establishes that there will be no charge for the Transfer and Donation of Any Type of Property or Rights Tax (ITCMD) in cases where the assets are inherited by public, religious, political, union entities, and non-profit institutions with a public and social relevance purpose.

The maximum tax rate to be charged will be set by the Senate and established by the states and the Federal District, being progressive according to the value, legacy, or donation.

Furthermore, the proposal says that large estates will be taxed at the maximum rate, but leaves it up to the states to regulate what is considered a “large estate.”

During the vote, Congressman Reginaldo Lopes praised the work of the rapporteur Mauro Benevides Filho and said that the measure “has been a societal desire for more than 40 years.” “Society can be sure that the best project for the IBS management committee is being voted on,” he said.

On the other hand, Congresswoman Coronel Fernanda argued against the urgency and emphasized that the voted reform “will destroy our country.” “At this moment, a bill with over 150 pages has just been introduced. There’s no way to vote on urgency if even we parliamentarians cannot fully understand the text. Simplifying cannot be synonymous with increasing taxes. Therefore, the Liberal Party opposes it,” said the government opponent.

On Monday, in addition to addressing the priority of tax reform, Mr. Padilha also commented on the discussion in the Supreme Federal Court about the rules for congressional earmarks to the budget. In a conversation with journalists, he denied that the Planalto Palace had influenced Justice Flávio Dino of Brazil’s Supreme Court to suspend the payment of individual congressional earmarks alleging a lack of transparency. These are funds transferred directly to states, the Federal District, and municipalities without a specific indication of destination.

Mr. Padilha spoke on the matter when asked about possible retaliation by Congress members, who see the “fingerprint” of the current administration in this decision.

“There’s no government fingerprint on a Supreme Court decision. Whatever new decision comes, the government will comply. It is not the government’s role to influence Supreme Court decisions,” said the minister.

The issue is sensitive because this week, Congress will undertake a concentrated effort when several proposals are voted on more quickly. This means that legislators might defeat the government as a message to the Lula administration. The parliamentarians’ distrust stems from the closeness between President Lula and Justice Dino, who was minister of Justice in the beginning of the Lula administratio

*Por Marcelo Ribeiro, Raphael Di Cunto, Renan Truffi — Brasíl

Source: Valor International

https://valorinternational.globo.com/