Eduardo Braga (MDB-AM) said that if the reform “loses the presidential mandate” due to the principle of annuality, it will not “happen”
The tax reform rapporteur in the Senate, senator Eduardo Braga (MDB-AM), said that if the text is not promulgated this year, there is a risk of “lose the presidential mandate and tax reform will not happen”.
The statement was made in an interview with the newspaper Economic value, released this Monday (30.Oct.2023). According to him, what would prevent this is the principle of annuality.
“We established in the report a deadline of 240 days after promulgation for the Executive to present the complementary laws that are necessary to implement the constitutional amendment, similar to what we did in the Transition PEC. If this agenda is not enacted this year, we will have lost two years, because it cannot, according to the principle of annuality, happen without starting in 2026. Then we will lose the year 2024, we will lose the year 2025, we will lose the year 2026, we will once again lose the presidential mandate, and tax reform will not happen”explains.
Braga presented the proposal report last Wednesday (Oct 25). It will be voted on CCJ (Constitution, Justice and Citizenship Committee) of the Senate and then in plenary. As it was changed in the Upper House, if approved, it must still undergo analysis in the Chamber.
Braga and the president of the Senate, Rodrigo Pacheco (PSD-MG), await the vote on the proposal at the CCJ by November 7th. Once approved by the committee, the rapporteur’s objective is to begin discussion of the PEC in the plenary on the same day, with voting completed on November 9th.
Asked about possible “excessive optimism” regarding the calendar, Braga stated that those who defined the dates were Pacheco and the president of the CCJ, David Alcolumbre (União Brasil-AP), and that it was only up to him to deliver the report by October 25th, “and I managed to meet the deadline”he stated.
In the text, Braga decided to increase the value of the FDR (Regional Development Fund) from R$40 billion to R$60 billion. The senator also replaced the Federative Council with a management committee. States and municipalities complained about the loss of autonomy in revenue administration.
According to the rapporteur, the increase was due to the “blanket was too short”. “R$40 billion reais was too little for the size of the challenge. It was a breakthrough to raise the fund to R$60 billion”, he said. He also stated that, now, the discussion is about the criteria for distributing the fund.
ABOUT THE REFORM
The main objective of tax reform is to simplify taxes in Brazil. As there are many points to be defined by complementary law, the rapporteur proposed that the government have 240 days to send its proposals for complementary laws after the promulgation of the PEC.
The proposal also establishes the unification of taxes. Currently, the country has 5 taxes that apply to products purchased by the population: IPI (Tax on Industrialized Products), PIS (Social Integration Program), Cofins (Contribution for Social Security Financing), ICMS (Tax on Circulation of Goods and Services) and ISS (Service Tax).
The proposal is to simplify them into dual VAT for goods and services, with federal taxation, which would unify IPI, PIS and Cofins, and another state/municipal taxation, which would unify ICMS and ISS.
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