The Senate approved in the 1st round this Wednesday (7.Dec.2022), by 64 votes in favor and 16 against, the PEC (Proposed Amendment to the Constitution) that breaches the spending ceiling and has a fiscal impact of more than R$ 200 billion. The text was approved with few changes in relation to what went through the CCJ (Commission of Constitution and Justice). In the 2nd round, there were 64 votes in favor and 13 against. Thus, the text goes on for analysis by the Chamber.
Even though the Chamber still needs to analyze it, it is already a significant victory for the president-elect’s government, Luiz Inacio Lula da Silva (PT). read the full of the approved opinion (242 KB).
The senators also analyzed 3 highlights presented by the PL, Podemos and PP. None, however, were approved. Otherwise, they could have dehydrated the proposal and imposed a defeat on the elected government.
The most relevant was the validity of the measure: 1 or 2 years. In that vote, the Lula party had 55 of the 81 possible votes and the term was set at 2 years. But it was made clear that the current government currently has 26 votes in the Senate. In 2023, that number increases with the new occupants of 27 chairs in the House.
- dehydration: Pode’s highlight for reducing the hole in the ceiling to R$ 100 billion, the term for 1 year and the deadline for sending the new tax regime to June 2023. There were 27 votes in favor and 50 no. It was rejected;
- less time: highlight of the PP reduced to 1 year the validity of the hole in the ceiling of R$ 145 billion. There were 55 votes for maintaining the text and 23 for the change. It was rejected;
- PIS/Pasep: highlight of the PL to remove the possibility of using accounts forgotten about the benefits outside the ceiling, the impact outside the ceiling is R$ 24.6 billion. There were 58 votes for maintaining the text and 19 for the change. It was rejected.
Scheduled for 4 pm, the Senate session to vote on the PEC began 43 minutes later. The analysis of the proposal, however, only started at 7:36 pm. Earlier, senators honored their colleague Fernando Bezerra (MDB-PE), who gave a farewell speech to Casa Alta, as his mandate is coming to an end. The last voting ended at 23:22.
The text received 11 plenary amendments that did not reach the number of signatures necessary for deliberation by congressmen. Only the senator’s proposal Oriovisto Guimaraes (Podemos-PR) was analyzed and rejected by the rapporteur Alexandre Silveira (PSD-MG).
The Guimarães amendment proposed to reduce the R$ 145 billion slack in the spending ceiling for 2 years to R$ 100 billion in just 1 year. The senator also suggested that the president-elect, Luiz Inacio Lula da Silva (PT), send the new tax regime proposal to Congress by June 30, 2023, and no later than August 31, 2023.
Approving the PEC before taking office was the way chosen by Lula’s group to continue paying the Auxílio Brasil in the amount of R$ 600. The PT also promised in the presidential campaign to give an additional R$ 150 to families with children up to 6 years old.
Proposed amendments to the Constitution, however, are the most difficult type of bill to pass. Demands ⅗ of the votes in the Senate and in the House, in 2 rounds of voting in each House. It also complicates the fact that the end of election years tend to be more emptied in the Legislative.
Another complicating factor is the tight schedule. Congress works only until December 22, 2022. Then comes the recess.
The initial idea was to have a joint negotiation between the Senate and the Chamber for the senators to approve a text that was palatable to the deputies. Thus, the risk of the Lower House altering the project and needing a new analysis by the Senate would be lower.
In a meeting on Monday (Dec 5) between congressmen and the presidents of the Chamber, Arthur Lira (PP-AL), and the Senate, Rodrigo Pacheco (PSD-MG), the deputies did not secure a vote without changing the text of the senators if there is no broad agreement.
It was requested, then, that the Senate approve the proposal this week, even if there is no agreement closed with the Chamber. In this case, the deputies would make some changes to the text and the senators would need to be mobilized to vote on the proposal again afterwards.
The leader of the Bolsonaro government, deputy Ricardo Barros (PP-PR), said that the proposal should be voted in the Chamber next Wednesday (14.Dec).
REPORTER’S AMENDMENTS
The most relevant article of the ceiling-breaking PEC to lubricate support for the proposal in Congress is the one that allows the release of up to BRL 22.97 billion that can be spent in 2022, without major constraints on how the money will be used.
In practice, part of this money will be used to settle, until December 31, 2022, the payment of the so-called rapporteur amendments, of the RP9 type (an internal classification of Congress).
The amendments are a part of the Budget that the rapporteur of the LOA (Annual Budget Law) defines the destination, but there is not enough transparency about where the resources are used and who asks for them. This type of device has been negotiated between deputies and senators to enable the approval of projects of interest to the government.
According to Power360 found out, Lira would like to pay about R$ 10 billion in rapporteur amendments for deputies still in 2022. This would make Lira’s re-election even more guaranteed for another 2-year term in charge of the Chamber – the election is in the 1st week of February, after the inauguration of the new deputies (on February 1, 2023).
Barros, in turn, defended using the PEC to try to save the rapporteur’s amendments. The transfer modality is on trial at the STF (Supreme Federal Court) and congressmen fear losing this prerogative if they do not include the device in the Constitution.
The deputy stated that the Senate should put a device to “constitutionalize” the rapporteur’s amendment and “kill the judgment of the stf🇧🇷 He wanted to put the passage on the vote this 4th, but the idea did not gain adherence among the senators.
🇧🇷This has to come from the Senate. It’s no use, we put it here and the Senate doesn’t vote, we just wear ourselves out”, he declared.
With the trial underway at the STF, congressmen want to rush to include the rapporteur’s amendments in the constitutional text.
If the complement to release the rapporteur’s amendments does not pass the Senate, another option would be to place the device in the Chamber and then return the amended PEC to the Upper House. This possibility is more risky, because there should not be unanimity among senators on the subject.
the senator Otto Alencar (PSD-BA), who supports President Lula, says he would have no problem approving a text that constitutionalizes the rapporteur’s amendments if the PEC arrives from the Chamber. Already the senator Humberto Costa (PT-PE) declared that, if the deputies included this in the proposal, Congress could enact only the common passages of the ceiling-breaking PEC and ignore the “novelties” of the Chamber.
The outcome of the Supreme Court judgment on the constitutionality of the rapporteur’s amendments should end next week.
CHANGES AND FISCAL IMPACT
On the afternoon of this Wednesday (7.Dec.2022), the proposal’s rapporteur presented a new version of the text, with 2 changes.
The 1st extends until the end of 2023 the deadline for states and municipalities to use resources they received directly from the National Health Fund and the National Social Assistance Fund to face the pandemic.
According to Senator Alencar, there are around R$ 2 billion in the funds of subnational entities that would fit the rule and would be released for another year.
The 2nd change includes all ICTs (Scientific, Technological and Innovation Institutions), and not just the Oswaldo Cruz Foundation, with the release of the ceiling on expenses funded by “own income, donations or agreements, contracts or other sources”.
As shown the Power360the 2023 budget proposal reserves, for Fiocruz alone, R$ 7.5 billion in funds that would be outside the cap by the PEC rule.
The total fiscal impact of the approved version of the PEC can reach at least R$ 204.1 billion. The estimate takes into account the devices that release up to R$ 24.6 billion in PIS/Pasep accounts, R$ 7.5 billion for Fiocruz and R$ 5 billion for universities.
Silveira wrote in his opinion that the tax impact would be BRL 168.9 billion. But, without detailing values, he included in the text, still in the CCJ, new permanent exceptions to the spending ceiling that make the total scoop exceed R$ 200 billion. The estimate of the total fiscal impact of the PEC is from public budget specialist Dalmo Palmeira.
The permanent exceptions add to the BRL 145 billion slack that the text opens in the spending ceiling in 2023 and 2024. Despite being yet another hole in the mechanism, the PEC rapporteur described the measure as a “enlargement” from the ceiling.
The value is the result of a cut of BRL 30 billion from the amount initially proposed, of BRL 175 billion, which corresponds to the total cost of the Brazil Aid of BRL 600 and an additional BRL 150 per beneficiary family with children up to 6 years old. years old.
To approve the PEC in the CCJ (Commission of Constitution and Justice), senators allied with President Lula accepted the reduction of the figure.
Read the types of expenses that the PEC takes from the ceiling:
- money from PIS/Pasep accounts that have not been moved for over 20 years – up to R$24.6 billion;
investments paid with excess revenue – up to R$ 23 billion; - Fiocruz expenses (Fundação Oswaldo Cruz) paid with own income, donations or agreements – R$ 7.5 billion;
- expenses of federal educational institutions paid with own income, donations or agreements – R$ 5 billion;
- socio-environmental projects paid for with donations or resources from judicial and extrajudicial agreements – R$ 42 million;
- investments in transport infrastructure paid for via loans from multilateral organizations – with no estimated value;
- engineering works and services carried out by the Army with money transferred from states and municipalities – no estimated value.
The values that the PEC would release to Fiocruz, universities and environmental projects are foreseen in the PLOA (annual budget bill) 2023.
The value in forgotten PIS/Pasep accounts is in the last balance released by Caixa Econômica Federal, in August. According to Caixa, the money was left by 10.6 million people who worked with a formal contract or as civil servants from 1971 to 1988.
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