Text will be presented on the 5th (Oct 19) at the Economic Affairs Committee by the rapporteur, senator Efraim Filho (União Brasil-PB)
The rapporteur of the GT (working group) on tax reform, senator Efraim Filho (União Brasil-PB), presents its text this Thursday (19.Oct.2023) at the CAE (Economic Affairs Committee) of the Senate. The group was formed in June and included 1st senators, including the rapporteur of the reform in the Upper House, Eduardo Braga (MDB-AM). The session is scheduled for 10 am (Brasília time)
To the Power360Ephraim said that he will propose in his text a reduction of tax transition time. According to the proposal, the time is 50 years. “We must analyze the transition period. We are finding it too long. There will be a proposal to reduce this period.”he declared, without detailing the proposed deadline.
In addition to changing the transition period, the rapporteur will also suggest that the selective tax is more limited. “In pursuit of what the Chamber proposed, it brings a very broad concept, which is not very transparent, and which causes legal uncertainty”he said.
The Selective Tax included in the tax reform would be the responsibility of the Union, on goods and services harmful to health and the environment. The products that will be affected by the measure will be decided later.
Under the current proposal, the tax may apply to more than one production chain. For example: being charged for production and marketing. It will be charged on imports, and will not be charged on exports.
Efraim will also defend in his opinion that the constitutional text establishes a ceiling for tax rates. “The ceiling of what we pay today will be the ceiling of what can be presented as a tax rate”said the senator.
The congressman also says that a possible increase in the Regional Development Fund, currently set at R$40 billion. According to the rapporteur, the possibility of increasing the value should be discussed at the CCJ (Constitution and Justice Commission).
The fund aims to reduce regional inequalities and encourage the maintenance of businesses in less developed regions.
The GT rapporteur is critical of the cashback proposal inserted in the tax text. According to him, the proposed system does not dialogue with the poorest. “For me to have the back, I have to have the cash. The system does not dialogue with reality of the most vulnerable Brazilian class”he declared.
The mechanism proposed in the reform allows the refund of taxes to a target audience, such as low-income people, for example. The regulation of this process, however, will be defined by complementary law.
The president of CAE, senator Vanderlan Cardoso (PSD-GO), he told Power360 who is optimistic about Efraim’s report and that possible changes to Braga’s text proposed by the GT could be discussed at the CCJ. Therefore, the senator says he does not see a tight deadline.
The Senate reform rapporteur intends to present his final text on October 24 for consideration by senators at the CCJ. Congressmen have already presented more than 100 amendments to the text of the reform approved in the Chamber.
The PEC (Proposed Amendment to the Constitution) for tax reform was approved in the Chamber in July. The deputies approved it in the 1st round and, subsequently, in the 2nd round with 375 votes in favor and 113 against.
Now, it will be analyzed by senators, who intend to approve the proposal by mid-November. Afterwards, the text will need to return to the Chamber. Congress’ objective is to complete the reform this year.
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