President of the Senate states that Congress has already overturned the veto on the benefit during the administration of former president Jair Bolsonaro (PL)
The President of the Senate, Rodrigo Pacheco (PSD-MG), stated this Friday (November 24, 2023) that the veto on payroll tax relief must be analyzed in a Congress session by the end of the year. How the Power360 showed, party leaders in Congress are in a hurry and articulate the overturn of the president’s full veto Luiz Inácio Lula da Silva (PT).
“Let’s listen to the Minister of Finance [Fernando Haddad] and take the appropriate decision in a session of the National Congress, which will take place later this year to consider this veto”he said in an interview with journalists, after participating in a Faap (Fundação Armando Alvares Penteado) event, in São Paulo.
The Minister of Finance, Fernando Haddad, stated this Friday (24.nov) that he must present a “solution” to compensate the affected sectors after returning from the trip to Dubai, in the United Arab Emirates, to participate in COP28 (2023 United Nations Conference on Climate Change). He did not detail what action will be proposed.
Pacheco said that Congress evaluates the exemption as something “very positive for the country”. He mentioned that the extension of the benefit had already been subject to vetoes before, which was later overturned by the Legislature, during the government of the former president Jair Bolsonaro (PL).
“This veto episode has happened before. The issue of payroll tax relief has a reason for being, it is not purely and simply a random benefit. The country needs to generate jobs, companies that generate a lot of jobs need to survive”he stated.
According to the president of Casa Alta, by reducing payroll costs, it is possible to generate greater employability and avoid unemployment. The exemption benefits the 17 sectors of the economy that employ the most and has existed since 2012.
“There is a reason for being, and of good merit, the tax relief program, which has been adopted for some time. It was already the subject of a veto in the previous government, and the National Congress overturned that veto at the time, so what we have now is an extension of what already exists. It is not a new exemption”he said.
Calendar
The president of the Senate has not yet scheduled the next Congress meeting. Due to lack of agreement, the analysis of Lula’s vetoes has already been postponed 3 times. There are impasses regarding the sections rejected in the projects of the indigenous lands time frame, the Carf (Administrative Council of Fiscal Resources) rules and the new fiscal framework.
The overturning of the veto on payroll tax relief, however, is a topic considered consensual among congressmen and will be treated as a priority, since the benefit to the sectors ends in December 31, 2023.
The government wants to gain time in negotiations and will try to maintain at least part of the veto, such as the section on the reduction of social security rates in municipalities with up to 142 thousand inhabitants. To overturn a veto, votes from 257 deputies and 41 senators are required, in a joint session.
The Congress calendar until the end of the year is tight. There are another 34 vetoes pending analysis, credit projects and the 2024 Budget, which needs to be voted on by December 22nd. According to the calendar of the LOA project (Budget Guidelines Law), the last session of Congress will be on December 21st.
The leader of the Government in Congress, senator Randolfe Rodrigues (no party-AP), expects the next joint session to be held on Tuesday (Nov 28), at 12pm, but the meeting has not yet been officially scheduled.
O Power360 found that the other date considered is December 12th. This possibility is considered likely because it is after COP28. The assessment of government officials is that the eventual overturning of the veto on the time frame before the international conference would be negative for the government’s image.
As this digital newspaper showed, congressmen did not expect Lula’s full veto on the text. It was agreed that the government could veto the part related to social security benefits for municipalities, but deputies and senators believed in sanctioning payroll tax relief for sectors of the economy.
Understand the proposal
The exemption allows companies in the benefited sectors to pay rates of 1% to 4.5% on gross revenue, instead of 20% on the payroll. Since 2012, when it came into force, it represents a loss of revenue R$ 139 billion for the Union, according to data from the Federal Revenue Service. For 2023, the estimated impact is R$9.4 billion.
The measure benefits the sectors that employ the most in the country: footwear, call center, civil construction, communication, clothing and clothing, construction companies and infrastructure works, leather, vehicle and body manufacturing, machinery and equipment, animal protein, textiles, information technology, communication technology, integrated circuit design, metro-rail passenger transport, public road transport and road freight transport.
The last extension of the payroll tax reduction was sanctioned by Bolsonaro on December 31, 2021 and is valid until the end of this year. At the time, the law was published without indicating a measure to compensate it with the justification that it was the extension of an already existing tax benefit.
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