What Lula proposes for the tax system if elected

After several failed attempts by a tax reform wide in recent governments, the former president Luiz Inácio Lula da Silva (PT) says that, if elected this year, he plans to work on a “sliced” process of changes to the country’s tax model. Without going into details, he has already declared that he wants to make the taxation system more progressive, in order to satisfy both businessmen and consumers, and that he can unify taxes.

“I don’t know if we have to keep talking about tax reform [ampla], which is a very complex thing”, he said, last Thursday (28), during an event held by the National Transport Confederation (CNT). “Maybe we can get to the crucial points and, point by point, manage to make a tax model happen that we can satisfy both those who produce and those who consume”, he suggested.

A day earlier, in an interview with the UOL portal, Lula said that it is possible to adopt a single tax model on consumption, in addition to taxing profits and dividends. “Tax policy can be a VAT [imposto sobre valor agregado]it could be something in which we manage to reduce the amount of taxes, that we reduce bureaucratization, but that we make people pay on profits and dividends”, he said.

In April, in a meeting with the union centrals, the PT had already stated that it is necessary for the upper classes to collect more taxes than the poorest. “We will have to carry out a tax reform that takes into account that those who earn more have to pay more. A reform that does not allow the person who lives on his salary of 3, 4 thousand reais, when buying a product, pay the same as the president of a bank, ”he said.

A recent study conducted by researchers from the Center for Metropolis Studies (CEM), at the University of São Paulo (USP), with the support of Samambaia Filantropia, showed that only 5% of almost 5,000 legislative proposals related to the tax issue aimed to make the regime more progressive.

Today, there are at least three proposals for amendments to the Constitution (PEC) pending in Congress that deal with structural changes in the Brazilian taxation model – the PECs 45/2019, 110/2019 and 7/2020. President’s campaign pledge Jair Bolsonaro (PL), the reform of the tax system ended up not advancing during the current government, mainly due to a dispute between the interests of the federal government, states and municipalities, industry sectors and even between the Chamber and Senate.

If he returns to the presidency, Lula can take advantage of parts of the texts already in process. “It is an effort that we are making. Having a complete, comprehensive tax reform project, but building a strategy of sliced ​​forwarding”, said the coordinator of the PT candidate’s government plan, Aloizio Mercadante, to the Reuters news agency.

For the candidate, a new tax policy proposal is more likely to advance if it starts with a discussion with the various segments involved. “We do not want to deny the entrepreneur, the banker, the merchant, the farmer, the right to speak. But they have to speak at a negotiating table where workers are represented,” he declared in April.

The strategy is the same adopted in Lula’s second government, which, however, did not prosper. The former president himself recalled, during the CNT event, the experience. “In April 2007, I took to Congress a proposal for a tax policy built, first, with all the presidents of federations of industries in this country; second, with all the political leaders of the National Congress; and then, with all the political parties, and more with the trade union centrals”, he reported. “And even more, with 27 state governors.”

“When I took the tax reform proposal to the National Congress, I thought it would be voted on like those votes for accountability in the union: ‘who is in favor, stay as it is, who is against, raise your hand’. The truth is that when the rapporteur was chosen, who was the [então deputado federal] Sandro Mabel [PL-GO, à época no MDB]tax reform has not progressed, and so far nothing has happened.”

What the three PECs say about tax reform in progress in Congress

Since the enactment of the 1988 Constitution, there have been proposals for tax reform in virtually every government. According to the Chamber of Deputies, only three of them were approved by a special committee of the House, but none were voted on in plenary: PEC 175/1995, in the Fernando Henrique Cardoso government (PSDB); the PEC 233/2008, in the Lula government; and PEC 293/2004, in the Michel Temer government (MDB).

In the first year of Bolsonaro’s term, the Chamber of Deputies presented the PEC 45, authored by deputy Baleia Rossi (MDB-SP), and, in the Senate, PEC 110, led by Senator Davi Alcolumbre (União-AP). Of these, the second was the one that advanced the most, already having a report favorable to admissibility, by Senator Roberto Rocha (PSDB-PA), in the CCJ of the Senate.

In general lines, the proposal of PEC 110 is to unify taxes on consumption in a “dual” VAT model, with a tax of federal competence and one of responsibility of states and municipalities. However, under pressure from various sectors of the private sector, the vote on the opinion has been postponed since the beginning of the year and should no longer occur in 2022.

Neither of the two proposals is fully accepted by the government, which last year preferred to carry out a “sliced” reformstarting with specific changes to the Income Tax (PL 2,337/2021) and unification of federal taxes PIS and Cofins into a single tax, the Contribution on Goods and Services (PL 3,887/2020).

With strong resistance from states and municipalities, the first even passed the House, but has been stalled since September 2021 in the Senate Committee on Economic Affairs (CAE). The second to date has not even had a report presented.

In May, a third PEC, 7/2020, authored by deputy Luiz Phillipe de Orleans e Bragança (PSL-SP), who had already received a favorable opinion from the CCJ of the Chamber at the end of 2021, advanced with the installation of a specific special commission. the text, which aims to limit public revenue to just three taxes – on income, consumption and property –however, should not go to the vote in the current legislature due to the beginning of the electoral campaign.

Meanwhile, the government has adopted measures to reduce the tax burden, in some cases on a temporary basis and in others permanently. Among the most recent are the 35% linear cut in IPIthe provisional exemption of federal taxes on gasoline and ethanol, and the sponsorship of the project which limited the ICMS charged by states on fuel, electricity, public transport and telecommunications.

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