Senate President Rodrigo Pacheco (PSD-MG) is betting on a concerted effort in the Legislative House next week to try to unblock the controversial tax reform.
The initiative has been considered as the last chance for the proposal that unifies taxes on consumption to be approved later this year.
The approval of the reform became Pacheco’s main objective, to present as the most important mark of his first term at the head of the Senate.
After abdicating from running for the Palácio do Planalto, the Minas Gerais senator wants to demonstrate negotiation skills and secure himself for a new term in charge of the Federal Senate, in 2023.
Pacheco’s initial plans called for the reading of the report and voting in the CCJ to take place shortly after the end of the parliamentary recess, in early February.
After almost two months of resumption of work, the tax reform had its opinion presented by the rapporteur, Senator Roberto Rocha (PTB-MA), but any progress came up against long debates, obstructions, requests for views and canceled sessions.
The text provides for the replacement of the main taxes on consumption by a dual VAT (Value Added Tax) in two spheres: one federal and another state and municipal.
At the federal level, the current PIS and Cofins would be replaced by the CBS (Contribution on Goods and Services). At the regional level, the ICMS (Tax on the Circulation of Goods and Services) and the ISS (Tax on Services) would both be replaced by the IBS (Tax on Goods and Services).
The states and municipalities would have the autonomy to set their own rates, but the legislation would be unified, and the charge would be made only at the destination of each good or service.
Even with the heavy articulation of the top of the House, senators see great chances of the onslaught to founder. In addition to the complexity of the issue, there is resistance from several blocs, in a context already contaminated by the October elections.
The Senate president called for a concentrated effort for the period from Tuesday (5) to Thursday (7), aimed at voting on the appointment of authorities for positions, such as ambassadors, presidents of regulatory agencies, among others. These votes cannot be done remotely.
Pacheco wants to take advantage of the massive presence of senators in BrasÃlia next week to try to vote on the tax reform in the CCJ and eventually in the plenary.
“The important thing is our commitment to the tax reform, which will not be shelved. Our desire is to see it appreciated. Rejecting or approving, it is voted on in the Federal Senate”, said Pacheco recently, after an event at the Public Ministry of Ceará.
The articulation to vote on the proposal during the concentrated effort would have been an agreement closed with Roberto Rocha, who seeks to close a rapporteurship that demands great effort and attention. The senator wants to focus on his pre-campaign for the government of Maranhão, while trying to capitalize on his role as a kind of father of tax reform.
In the last two weeks, Pacheco received the main leaders of the Senate benches, seeking support for the vote. He heard promises of effort to try to convince DEM, PP and PSD senators.
However, he also heard indications that there will be stronger resistance from other large groups, such as the MDB – the largest in the House, with 14 parliamentarians.
Senators point out that this should be the tax’s last chance, as April will be a month with long holidays and little in-person activity, May will be marked by articulations of party federations and the following months will be dedicated to coalitions for the elections.
The second half of the election year is traditionally marked by practically non-existent parliamentary activities.
“I defend that it be voted on in the CCJ. It would be a very correct agenda for the Senate to approve the tax reform. But the tension of the party window will still be very high. It will decrease a little with the end of the window, but the deadline for inclusion in the system goes further. So there will still be some of this issue in the minds of senators”, says senator and committee member Marcos Rogério (PL-RO).
The parliamentarian says that the concentrated effort itself can get in the way. If, on the one hand, there will be several senators present in BrasÃlia, enabling greater articulation, on the other hand, an eventual high number of hearings could take the focus away from the reform.
MDB leader in the Senate, Eduardo Braga (AM) is against voting on tax reform in an election year. He argues that a complex issue like this should be done based on a broader analysis of the country, not under the influence of electoral issues.
“I, in principle, think that a tax reform, which is neutral, which apparently does not bring gains to the taxpayer, because it does not bring tax reduction, but which has a series of electoral implications in each of the states, you cannot do this during an election period”, he says.
The new impetus for tax reform took place at the beginning of this year, when Pacheco was still appointed as a pre-candidate for the Planalto and saw in the proposal a showcase to present in the campaign. Roberto Rocha, since then, has presented his opinion and made some concessions to try to reduce resistance.
One of Rocha’s nods to please governors –who have great influence over senators– was to double the transition period for the IBS to 40 years.
However, some points still face criticism. Mayors question the end of the ISS, seen by this group as the pillar of tax autonomy for municipalities.
It is also in the sights to replace the IPI (Imposto sobre Produtos Industrializados) by a Selective Tax on cigarettes, tobacco, alcoholic beverages, or other products considered harmful to health or the environment.
The end of the IPI could reduce the competitiveness of the Manaus Free Trade Zone, whose products are already tax-exempt. Without a new tax to maintain the current tax burden on computer or electronics goods, goods produced in the region would lose their advantage over those made in the rest of the country.
In the economic team, the assessment is that any real chance of approval is limited to the CCJ (Constitution and Justice Commission), stage of the first stage of processing in the Senate of a constitutional change.
After the commission, the text would still need to obtain support from 49 senators in two rounds of voting in the plenary. Sources in the economic area assess that this is unlikely in an election year.
Other assistants to Minister Paulo Guedes (Economy) are even more skeptical and believe that no large-scale project is in a position to advance in Congress in 2022.
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