Tax reform comes out this year, ‘but I can’t say in how many months’, says Tebet


The Minister of Planning, Simone Tebet, said this Monday (13) that a tax reform proposal should be approved this year by Congress, but that she cannot “tell in how many months”.

At the beginning of the month, Tebet had stated, after a meeting with the mayor, Arthur Lira (PP-AL), that the discussion of the project would continue in the Legislature for at least six months.

The statement contrasts with that of the head of the Treasury, Fernando Haddad, and that of Vice President Geraldo Alckmin – both say that the proposal could be approved in the first half of this year.

Lira and the president of the Senate, Rodrigo Pacheco (PSD-MG), must meet to discuss the details of the rite. The Alagoan has already signaled willingness to take the text to plenary between 60 and 90 days.

Tax reform was chosen as one of the priorities of President Luiz Inácio Lula da Silva (PT) in the first semester in Congress. It is likely that this will be the first PEC (proposed amendment to the Constitution) of interest to the Planalto Palace to be voted on by the Legislature.

During a video participation in an event by Amcham (American Chamber of Commerce for Brazil) this Monday, Tebet also stated that, for the first time in the last three years, there are conditions for a consensus among the governors of all states around the PEC 45, by Bernard Appy, now the special secretary of the Treasury for the subject.

The PEC was presented by Deputy Baleia Rossi (MDB-SP) and replaces five current taxes (PIS, Cofins, IPI, ICMS and ISS) by a Tax on Goods and Services (IBS).

The Minister of Planning said that, during the term of Jair Bolsonaro (PL), the Executive lacked will, since conditions were already favorable, as they are now. “It was an agenda in which I was wrong as a senator, but I did not find dialogue with the Ministry of Economy”.

Today, however, nine states are governed by the opposition of Luiz Inácio Lula da Silva (PT), which can make discussions difficult. “No reform will be approved without consensus.”

According to Tebet, the Lula government sees this reform as a “silver bullet” to reduce bureaucracy in the private sector and accelerate growth and job creation.

For the minister, changes in income taxation should require more dialogue. “The project approved by the House needs adjustments in the Senate.”

Amcham survey of 465 executives released this Monday, however, points out that 66% of respondents say they do not believe or are not optimistic about the chances of approval of changes in the tax system.

Despite being pessimistic in relation to the success of the current administration, 68% of the businessmen interviewed by Amcham agree that reforming the tax system should be a priority measure for this mandate.

The CEO of Amcham, Dirceu Pinto, stated that the pessimism of the business community is backed by the history of frustration in the reform debate.

A new system of taxes and fees has been under discussion in the country since 1990 without major advances.

Minister criticizes unnecessary spending and says Brazil needs to do “homework” for the economy to take off

Tebet also said that the government needs to do “homework” for the economy to take off and criticized what he called unnecessary spending, adding that its mission is to avoid turbulence and identify better routes and paths to ensure predictability and stability.

“We have an unsustainable fiscal deficit; this impedes Brazil’s lasting sustainable growth,” said the minister during the Amcham event.

Given this scenario, said Tebet, the government will work on spending review, because it has “fiscal responsibility”, and on the efficiency of public policies, in order to stop “drying ice” and spending without knowing where you want to go.

“Brazil spends a lot and spends poorly. We have to analyze the impact of each program, each project, each action on a case-by-case basis, evaluate public policies and avoid unnecessary spending”, said Tebet.

However, “in addition to the homework of reducing this fiscal deficit, we have to invest in social matters”, pondered the minister, saying that the entire Brazilian population should be included in the Budget, but each one “in proportion to their needs”, so that the most vulnerable receive more attention.

Tebet’s speeches about the country’s fiscal situation came in the midst of great concerns in the financial market with the fiscal responsibility of the new government in the conduct of public accounts, since the PT administration is seen as more developmentalist.

Haddad presented in January an adjustment plan of up to R$ 242.7 billion in the 2023 accounts, which, in the minister’s view, could make the primary result reverse the currently forecast deficit and close the year in blue. However, he himself pointed out the possibility of frustration in part of the initiatives.

Tebet, seen by the markets as having a more moderate fiscal profile than Haddad, again said this Monday that she may have been called by Lula to the post because she has a “slightly different view” from other members of the economic team in terms of with regard to taxation, and made a nod to the financial market by saying that his portfolio will seek to articulate with the sector.

“We are going to articulate at all levels of government, with the ministries, with the National Congress, with the Judiciary, but also with the market, with academia, with organized civil society”, stated Tebet.

With Reuters

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