Opinion – Vinicius Torres Freire: Congress in a trance prepares electoral fraud and tax fraud

By the end of the week, accounts of tens of billions of reais may appear for the federal government, states and municipalities. How and who will pay? Next year we’ll think about it. It doesn’t matter if even more broken state government appears again, if there is no money for minimum income for the poor, if science and universities go to the garbage can for good or worse.

Congress is in a tax legislature fury as it has rarely been seen in a period of “concentrated effort”, when swathes of laws are passed just before election campaigns. It has everything, usually crazy measures, incompetence and favors — and even things it can provide.

Are under discussion:

1) Refills for medium and large companies and individuals (renegotiation and/or tax debt forgiveness). It leads to more public debt and is an incentive for not paying taxes on time;

2) change in the IR table (more people would pay less Income Tax). Jair Bolsonaro promised in 2018, missed the legal deadline, and now the governing Congress or demagogue in general wants to make the change anyway;

3) change in taxes on corporate profits and dividends (that tax reform that was in the drawer);

4) reduction of ICMS on electricity, fuel, communications and transport, which takes money from states, cities and Fundeb (the general fund that standardizes spending on education in states and municipalities);

5) use of federal government revenues from oil, etc. to offset losses of states and municipalities with the reduction of ICMS, changing the spending ceiling (see previous item);

6) increase in the federal tax on oil companies, also to reduce the cost of fuel, but it is not clear where the money would go (state and municipal compensation? Federal fuel subsidy?);

7) return to consumers of improper collection of federal tax on the electricity bill, which is correct, but if done all at once, it will cost at least BRL 50 billion, without it being clear where this bill will end up;

8) law that obliges Petrobras to explain how the price of its products is formed and, perhaps, to limit its margin (the extra on the cost of production).

It is impossible to be more precise because Congress treated the projects in a “cockroach fly” rhythm. There were no legal texts to read or think about. Moreover, in the early hours of Arthur Lira (PP-AL), all projects are gray and who knows what will be voted on or how.

At the end of the day, price-fixing, interventions in companies, subsidies, favors, revenue waivers and debt increases of tens of billions may appear.

In the short term, there may even be some effect on prices. But, let’s note in passing, just one example: in order to reduce the price of gasoline and diesel by R$ 1 for a year, it would be necessary to spend more than R$ 100 billion (which would not prevent further readjustments). Either they’ll open a big hole in the government vault or the thing won’t work.

“Consequences come later,” as the joke goes. The mess with public accounts has disastrous effects (it was one of the reasons for the Great Recession of 2015-2016).

Serious tax reform is tedious and terribly complicated. Without such a change, we will not have a functioning economy. It doesn’t go ahead because it involves heavy business interests, which end up paralyzing a Congress that is generally negotiable and led by smart ignorant people. Now they can approve a hodgepodge of changes.

In the confusion, the government is looted. In the end, the bill falls to the poor of a country that has stopped growing, the Peter Pan of misery.