The National Congress enacted this Wednesday (20) Constitutional Amendment 132, tax reform. It is the first broad reform of the national tax system carried out under the 1988 Federal Constitution. Its main effect is the unification of five taxes — ICMS, ISS, IPI, PIS and Cofins — into a single charge, which will be divided between the federal (CBS: Contribution on Goods and Services) and state (IBS: Tax on Goods and Services) levels.
The text that gave rise to the reform was PEC 45/2019, initiated in the Chamber of Deputies. The Chamber approved the proposal on July 7th and sent it to the Senate, which approved it on November 8th, with changes. The Chamber held a new vote on December 15th, approving the final version of the text.
The promulgation ceremony was attended by the President of the Republic, Luiz Inácio Lula da Silva; the president of the Federal Supreme Court (STF), Roberto Barroso; of ministers Fernando Haddad, of Finance, and Simone Tebet, of Planning, in addition to the vice-president of the Republic, Geraldo Alckmin. The session's panel included the reform rapporteurs in the Senate, Eduardo Braga (MDB-AM), and in the Chamber, Aguinaldo Ribeiro (PP-PB), as well as the author of the original PEC, deputy Baleia Rossi (MDB-SP). Rodrigo Pacheco, president of the Senate and Congress, led the session, which also included the participation of the president of the Chamber, Arthur Lira.
One of the creators of the change in the tax system, the extraordinary secretary for Tax Reform, Bernard Appy, and ambassadors from other countries and representatives of civil society entities were also present at the special session, in the Chamber Plenary.
Turning point
The president of the Senate, Rodrigo Pacheco, stated that the promulgation of the tax reform PEC is a historic milestone and a turning point in the country's history. He acknowledged that the proposal was subject to disagreements, but recalled the consensus that the current system is too complex and needed to be simplified. Pacheco admitted that the task of finding a final text was not easy, but said that Congress is now delivering a balanced text, focused on fiscal justice and reducing bureaucracy.
Pacheco thanked everyone who collaborated with the tax reform, so that a more rational and efficient model became possible. He praised the work of the rapporteurs on the matter in the Senate, senator Eduardo Braga (MDB-AM), and in the Chamber of Deputies, deputy Aguinaldo Ribeiro (PP-PB), and thanked the government for their commitment during the proposal's processing in Congress. For Pacheco, the tax reform crowns the work of the Legislature – which in recent years approved several reforms of interest to the country and guaranteed the fight against the Covid-19 pandemic.
For Pacheco, Congress approved the reform because Brazil could no longer live with the delay. The president of the Senate said that the tax reform “has imposed itself”. He also highlighted the maturity of the debate so that everyone involved, from parliamentarians to consumers, understood the need for the proposal. For Pacheco, the reform is the product of dialogue, within a democratic environment, and does not just mean a reduction in the amount of taxes, but points to a qualitative improvement in collection.
— The proposal represents the strength of Brazilian democracy. This is the beginning of a new country towards progress. It is an achievement for the National Congress and the Brazilian people — declared Pacheco.
Senator Eduardo Braga (MDB-AM), who served as rapporteur for the tax reform, said he had a feeling of duty fulfilled. He recalled that the topic had been discussed for 40 years. For the senator, the reform may not be ideal, but it is possible in a democratic regime. Braga stated that complementary reform laws should be voted on next year. He also highlighted cashback, in the case of electricity and cooking gas, and the brake against increasing the tax burden as important contributions made by the Senate to the reform. In the rapporteur's view, the reform will give Brazil the chance for a sustained cycle of economic growth.
— Congress is taking a historic step today. It is a reform that simplifies our taxation for consumption, brings transparency and legal certainty — said the senator.
Braga also highlighted the fact that international risk rating agencies, based on the tax reform, have already raised Brazil's position as a more reliable country for investments. He said that the Stock Exchange has grown, the dollar has been falling and employment has been rising, which shows the country's good economic situation. According to the senator, the tax reform has the potential to generate 12 million new jobs and also promote an increase in Brazilians' income.
— The text delivered today is the result of collective and democratic work. The new tax system puts an end to the tax madhouse that has imprisoned the country in recent decades — celebrated the senator.
Country victory
In President Lula's view, tax reform is a victory for the country, so that the Brazilian people can live better. He praised the commitment of government representatives and parliamentarians in seeking consensus. For Lula, the promulgation of the reform marks an extremely important day. The president highlighted the leading role of the Minister of Finance, Fernando Haddad, in drafting and seeking a broad agreement around the text, and of Rodrigo Pacheco and Arthur Lira, who carried out the tax reform.
Lula highlighted the union of different political tendencies in the interests of Brazil. The President of the Republic noted the participation of opposition parliamentarians in the discussion of the matter and stated that the presence of the presidents of the Powers and several authorities in the special session highlights the importance of the topic. Lula also thanked God for the enactment of the tax reform and said he was happy for the drop in inflation, the increase in employment and the minimum wage, the drop in interest rates and economic growth.
— What makes me happiest is this photograph: everyone here contributed so that, for the first time in a democratic regime, a tax reform was delivered to the country — said Lula.
Continuous review
The Minister of Finance, Fernando Haddad, thanked the dedication of deputies and senators in working to approve the tax reform. Haddad also praised the anonymous work of technicians, researchers and teachers, who suggested improvements to the reform text. He highlighted the team of the extraordinary secretary for Tax Reform, Bernard Appy, one of the creators of the Constitutional Amendment. In the minister's opinion, reform was an imperative need. Haddad also pointed out that, with the promulgation of Amendment 132, the STF becomes the guardian of tax reform. For the minister, although the reform has been criticized for not being the most perfect, it has the merit of transparency and justice and could bring several benefits to the country.
— The reform is perfect because it is democratic and humble, it provides for [continuous] review. Today, we can celebrate this achievement with the Brazilian people — said Haddad.
Basic basket
Minister of Planning, former senator Simone Tebet said that the tax reform is the employment and income reform, the only one missing to make Brazil really grow in the coming years. In the minister's opinion, the reform will give dignity to the Brazilian people.
— It is the reform of the poorest, the mother of all reforms, it is for Brazilian women, because unfortunately the poorest face of the Brazilian people is a black woman from the North or Northeast, who in times of crisis is the first to be sent although it is the last to be hired — said Tebet, highlighting tax justice and the tax exemption on the basic food basket, which will guarantee more food on the population's table.
Priority
For the president of the Chamber of Deputies, Arthur Lira, tax reform is an achievement for the Brazilian people. He thanked Pacheco for the “deference” of holding the promulgation session in the Plenary of the Chamber of Deputies — as a rule, constitutional amendments are promulgated in the Senate. Lira referred to the day as “historic and memorable” and said that Congress concludes its work with “civic pride”.
— Brazil expected and deserved an organized, efficient and fair tax system. The reform will accelerate the economy, strengthen entrepreneurship, generate thousands of jobs and change the lives of millions of Brazilians for the better — said the president of the Chamber.
Lira also assessed that the tax reform was successful because it was established as a priority of the National Congress since the beginning of the administrations of the current presidents of the Houses. According to him, previous attempts failed because they were subject to “diverse interests”.
— The reform gives a very clear message to everyone, that it is possible to unite Brazil when the interest is in the people. Whoever voted for or against voted out of conviction, and that is the beauty of democracy – he said.
"Impossible"
Representative Aguinaldo Ribeiro (PP-PB), rapporteur of the matter in the Chamber, stated that the reform is in fact a “citizen revolution” and that it is already showing its first effects, such as the improvement in Brazil's investment grade rating. For Aguinaldo, it is not “a possible reform” as some point out, but that “the impossible” has been done.
The first signatory of the original proposal, deputy Baleia Rossi, recalled that few believed in the approval of the tax reform in 2019, highlighted the contribution of several political actors and stated that the new law does not have “partisan coloring”.
— We have been discussing tax reform for 40 years. Today we are making history. We are changing Brazil for the better. This reform has no tax coloring. It is only through democracy that we will change our country for the better — noted the deputy, who mentioned Lula's support for tax reform even during the transition, when he advised Fernando Haddad to “carry out the reform” together with the deputy, who presides over the MDB.
Source: Senado Agency
