Government gives green light to override veto to exempt event sector

In a gesture to one of the sectors most affected by the pandemic, that of events, the government gave in and gave the green light to the overthrow of a veto by President Jair Bolsonaro (PL) to exempt companies in the sector from paying taxes for five years.

The movement had a decisive participation by Senator Flávio Bolsonaro (PL-RJ), son of the Chief Executive. On January 25, he published a video on social media in which he says that the order to override the veto came from the president himself.

“Bolsonaro was forced to veto provisions of the law to avoid incurring a crime of fiscal responsibility, but he gave the command to overturn the veto and help everyone who works in the segment”, said the senator.

The initiative’s target are hotel companies, cinemas, event venues, such as concerts, fairgrounds, parties and buffets. It also includes travel agencies, tour carriers, theme parks, campgrounds and hotels, guesthouses, and other accommodation facilities.

Flávio Bolsonaro also stated that he and his brother, Eduardo Bolsonaro (PSL-SP), would vote to review their father’s act.

After the video was published, in a signal to Minister Paulo Guedes (Economy), members of the Palácio do Planalto tried to work to maintain the presidential veto, given the potential impact on the Union’s coffers. 2 billion for this year.

Now, however, the orientation is to let the veto go to the vote of parliamentarians.

In Congress, leaders say that the trend is to restore the boon that had been granted by parliamentarians, still in early 2021. The overthrow also has the support of members of the congressional summit.

The veto is on the agenda of the Congress session this Tuesday (8), but the analysis should be postponed to the next day 16 February.

consumers affected by the pandemic

In parallel with the articulation in Congress, the government is preparing an MP (provisional measure) that must be published until the 15th to extend the flexibility of conditions for reimbursement to consumers for events, services or reservations that are canceled or postponed due to the effects of the pandemic.

This measure was adopted in 2020, when the Brazilian economy felt the first impacts of Covid-19, but it was only in force for events scheduled until December 31, 2021. The sector, one of the most affected by the health crisis, had been asking for an extension of the conditions more benevolent.

Until Monday night (7), the use of this MP to include measures that help the sector was not ruled out, in an attempt to avoid the overthrow of the veto.

On the morning of this Tuesday (8), however, congressmen participating in the articulations say that a wing of the government defends the restoration of benefits, while another group is still seeking to negotiate a compromise to resolve the imbroglio.

The veto under discussion fell on a law passed last year by Congress, with actions to help the sector through the Perse (Emergency Program for the Recovery of the Events Sector).

Bolsonaro sanctioned the sections that provided for debt renegotiation and the availability of resources from a guarantee fund to facilitate access to financing. However, the president vetoed the provisions that would generate tax waivers or increase spending, to avoid breaking fiscal rules.

One of the barred sections resets the PIS/Cofins, IRPJ (Corporate Income Tax) and CSLL (Social Contribution on Net Income) rates for companies in the sector. At the time of the veto, in May 2021, the waiver of revenue was estimated at R$3.2 billion for 2022.

There was also a forecast of payment of compensation of up to BRL 2.5 billion to companies that had a 50% or more drop in their billing in 2020.

The author of the project that created Perse, deputy Felipe Carreras (PSB-PE), says that the Legislature should really overturn Bolsonaro’s veto. The trend was confirmed by members of the government and the top of Congress.

The parliamentarian also says that he was warned that the new MP that will benefit the sector should be published no later than next week.

The promise of new measures had already been made in May 2021, when Bolsonaro had to stop broad tax exemptions.

At the time, the then Special Secretary for Productivity, Employment and Competitiveness, Carlos da Costa, said that the solution should focus on companies that suffered the most and that were not large.

“Hence the volume of compensation is much smaller than what would be necessary. It is a veto that does not eliminate the tax advantage that we are going to give”, explained da Costa. The measures, however, did not leave the paper.

The pressure to override the veto is on the radar of the economic team, which has faced difficulties in defending itself from the appetite of members of the government and Congress for granting benefits in an election year.

The fact that Bolsonaro’s own son encouraged the overthrow of the veto upset members of Economy Minister Paulo Guedes’ team.

“President @jairmessiasbolsonaro will zero taxes for events across Brazil,” wrote Flávio Bolsonaro on January 25th.

The senator published a video alongside the Secretary of Culture, Mário Frias, and the Secretary of Promotion and Incentive to Culture, André Porciuncula talking about the subject.

During the process, the government was against this project, especially with regard to the renegotiation of tax pending issues. The measure was considered a “fiscal bomb” by technicians from the Ministry of Economy.