New government evaluates tax reform texts that are in Congress

The transition team of the elected government considers it possible to take advantage of the tax reform texts that are already in the National Congress.

Bernard Appy himself, appointed this Tuesday (13) by Fernando Haddad as responsible for taking care of the reform, told allies in recent days that he is optimistic with the progress, but also assessed that it is subject to political decisions by the new government.

In Congress, the reform proceeds on two fronts. One of them, focused on the taxation of consumption, based on the two PECs: the 45 that is in the Chamber and the 110 that is in the Senate. Appy helped draft PEC 45, presented by Deputy Baleia Rossi (MDB-SP).

The other front focuses on income and payroll taxation. The government of President Jair Bolsonaro forwarded bill 2337, which is being discussed in the Senate, on this subject, but Appy, according to members of the transition group, is a critic of it and defends its revision in order to take advantage of the fact that it has already passed through the Chamber or even forwarding a new proposal.

He assesses, for example, that there are a series of defects and distortions in this project, such as too much protection for high incomes. The proposal, for example, does not tax offshore companies.

The feeling is different about the PECs, and Appy evaluated during the transition to interlocutors that it is necessary to make a political decision above all about which text to defend.

Technically, both tax consumption, but there is a basic difference. PEC 45 proposes a Value Added Tax (VAT) while PEC 110 proposes two “single” contributions, one on federal taxes and the other on state taxes (called Contribution on Goods and Services).

This PEC has already gone through much more debate than the 45 with sectors of the economy (services, for example) and the state (governors and Treasury, for example). Your report is ready to be voted on.

As Appy himself has already confided to allies, the decision to advance the reform is eminently political. The new government will need to define whether it privileges a text from the Chamber of Arthur Lira that is at a standstill and that was idealized by a president of a neo-allied party, the MDB, Baleia Rossi. Or you take advantage of the work done by President Rodrigo Pacheco’s Senate.