Bolsonaro vetoes Simples Refis for fear of violating electoral law, and government officials negotiate with Congress

The fear of bumping into the fences of the electoral law led President Jair Bolsonaro (PL) this Friday (7th) to retreat and fully veto the bill that would open a debt renegotiation (Refis) with Simples Nacional and MEIs companies ( individual micro-entrepreneurs).

The jurisprudence of the TSE (Superior Electoral Court) is controversial on the subject, and the legal team advised the president not to risk becoming ineligible in the year in which he will seek a new term.

The veto, however, caused irritation in the National Congress, which is already articulating its overthrow.

Officially, the government’s justification for barring the law was the absence of a forecast of the tax waiver in the 2022 Budget, as well as compensation measures – such as tax increases. This is a requirement of the LRF (Fiscal Responsibility Law).

The Ministry of Economy indeed pointed out these technical obstacles, but Bolsonaro even signaled in his live that he would seek a solution to the fiscal impasse.

Technicians in the economic area pointed out the solutions to compensate for the resignation, which would be only R$ 200 million in 2022 with the adoption of a partial veto, to exclude only companies that had revenue gains even with the crisis.

At the last minute, however, the president was warned of the risk of violating the electoral law, as reported to leaf interlocutors from the Planalto Palace and the Ministry of Economy.

Paragraph 10 of article 73 of the law says that, in the year of elections, the free distribution of goods, values ​​or benefits by the public administration is prohibited, except in cases of calamity, emergency or programs that are already in execution.

The understanding of the government’s legal area was that the implementation of a new Refis in an election year could fit into the device, opening the door to legal questions.

In the view of government sources, if the thesis prevails, this could even make the Refis of large companies unfeasible, which will still be appreciated by the National Congress this year.

In the meetings on the subject that took place on Thursday night (6), a vote by the former minister of the Federal Supreme Court (STF) Marco Aurélio Mello was cited. In 2011, a judgment reported by the minister in the TSE pointed out that the granting of benefits through Refis in an election year violated the law.

“I respond to the consultation not only stating the impossibility and implementation of the tax benefit provided for by law in the year of the elections, but also the submission of a law for this purpose in that period”, said the report at the time.

In 2015, another judgment by the electoral court pointed out that whether or not to violate the electoral law depends on the specific case. In 2018, a decision by the TSE removed the incidence of the article that prohibits the granting of benefits in a judgment on Refis in the state of Paraíba.

According to a technician interviewed by the report, as there is still uncertainty and legal uncertainty regarding the subject, it would not be appropriate to include this in the justification of the veto. However, the electoral discussion was what motivated the last-minute change in Bolsonaro’s decision.

The assessment behind the scenes is that it would be best to adopt a conservative posture, to avoid future headaches. Despite this, the issue is not a consensus even among government technicians.

There are those who believe that Refis does not fit the case of the electoral law because it is not a free distribution — companies make an initial payment to join the program.

The veto caused dissatisfaction in the National Congress, where leaders are already articulating its overthrow. Parliamentarians point out that the government participated in the preparation of the project and also throughout the process.

The proposal is authored by Senator Jorginho Mello (PL-SC), who is the government’s deputy leader in Congress. The rapporteur of the project in the Senate was the then leader of the government in the House, Fernando Bezerra Coelho (MDB-PE) – who left the post in December.

Government leaders claim that the president was forced to veto the proposal, but that there is room to negotiate a solution that benefits these companies.

“The president was prevented from sanctioning, but not from negotiating. An effort could be made to release this issue under other conditions”, says the government leader in Congress, Eduardo Gomes (MDB-TO).

“The same energy that will be used to overturn the veto can be used to seek an agreement”, he says.

The initiative for the overthrow began this Friday (7), moments after the veto. A ruling party leadership points out that there was a “leash” on the part of the government, which would have failed to sanction the bill until December 31, which would avoid the fear of electoral crime.

Even working to overturn the veto, parliamentarians point out that it may be late, since it would only happen after the parliamentary recess ends, in February. They point out that the deadline for companies to opt for the Simples Nacional regime ends on January 31, and many will not be able to make the option because they have tax debts.

“The government starts the year with a shower of cold water in small and medium-sized companies, condemning thousands to closure now on January 30th”, says federal deputy Marco Bertaiolli (PSD-SP), who was the rapporteur of the project in the Chamber of Deputies and is the general coordinator of the Parliamentary Entrepreneurship Front.

“This is a project approved in concert with the government, with the economic team. It is unacceptable to break an agreement made in December and propose this full veto”, he added.

Interlocutors at the Ministry of Economy say that a possible solution to mitigate the effects of the veto is to extend the deadline for the registration of the request for debt installments, to prevent debtors from being excluded from Simples.

A longer deadline —auxiliaries say May 30 — would give time for Congress and the government to try to find a way out of the imbroglio created.

If Congress overrides the veto, economic sources say it will be necessary to offset the impact of the project. The total waiver is estimated at R$600 million, considering the reinstatement of the full text. There is still no consensus on how the electoral issue would look.