To have a fiscal framework we need tax reform, says Haddad

Quoted to take over the Ministry of Finance, the former mayor of São Paulo Fernando Haddad (PT) said this Tuesday (6) that it is necessary to approve a tax reform to advance in the debate on the new framework of fiscal rules.

“To have a fiscal framework we need a tax reform. Everyone needs to understand that Brazil needs a tax reform now. This discussion was postponed by 20 years”, said Haddad.

The text of the Transition PEC approved by the Senate’s CCJ (Constitution and Justice Commission) provides that the new government, of president-elect Luiz Inácio Lula da Silva (PT), will send a proposal for a new framework to Congress by August.

Haddad said that the proposal for a fiscal rule could be processed at the same time as the tax reform. “They can walk together, but they have to reconcile. You can even approve joining, but they cannot be in contradiction”, he also told the press.

He also said that “if the debate is advanced”, the reform could be approved in the first half of 2023.

“The framework will be much more solid, much more stable, long-lasting, lasting, the more security we have from the point of view of tax reform. Also because the costs, the ‘Brazil cost’, will be reduced a lot”, stated the PT.

He said that the reform will still provide greater legal security on taxes. “Only at Carf [Conselho Administrativo de Recursos Fiscais] has more than R$ 1 trillion pending judgment.”

Haddad told the press that he spoke this Wednesday with Lula and Aloizio Mercadante, coordinator of the thematic groups for the transition of government, the organization chart of the ministries for 2023.

“The president is validating what was presented,” he said.

The former mayor also defended the approval of the Transition PEC. The text approved at the CCJ extends the spending ceiling for the inclusion of Bolsa Família for a period of two years.

“We are not talking about fiscal expansion. We are talking about a serious problem that is happening. The government is not managing to close the year, how will it give the next government a smaller budget than the current year”, said Haddad.

He also defended a period longer than one year to ease barriers to Bolsa Família in the budget.

“The 1 year problem [de prazo]is that he’s going to spend next year, instead of consuming energy with what matters, solving the problem, tax reform, new framework, he’s going to be worried about [o orçamento] the following year,” he said.

Haddad followed Lula’s conversations with PSB, Solidariedade and PDT leaders on this fourth occasion.

The former mayor said that the first part of the reform being studied will deal with indirect taxes, after direct taxes. “The indirect ones have to come first, as it has a lot of impact on the state and municipality”, said the minister.

He declared that the first phase is the most important and would pave the way for the approval of a new fiscal framework.

“It involves larger federal conflicts and also conflicts between economic sectors. Industry and commerce, industry and service,” he said.

“If you manage to untie this knot, it will give the country strength to move forward. It has the opportunity to definitively resolve this,” he added.