Lessons learned from the Income Tax Reform and other weekly topics
Bolsonaro may file a request for impeachment against Minister of the STF Luís Roberto Barroso. The Senate is analyzing Augusto Aras's appointment as Prosecutor General of Brazil (PGR). Deputy Arthur Maia (DEM-BA) may read his report on the Administrative Reform proposal. In the STF, two matters may impact the markets: the judgment of the constitutionality of the Central Bank’s autonomy and the conclusion of the judgment of a case that could cost the Federal Government R$ 32.3 billion (the exclusion of the ISS from the calculation of the PIS and Cofins taxes).
This week's Talking Points:
* Tension continues among institutions
Last Friday, August 20, President Jair Bolsonaro submitted a request to the Senate for the impeachment of the Minister of the Supreme Federal Court (STF) Alexandre de Moraes. In the coming days, Bolsonaro has said that he will submit another request against Minister of the STF Luís Roberto Barroso. Bolsonaro's decision to submit an impeachment request against Moraes is creating obstacles for Pacheco's efforts toward rescheduling a meeting between the heads of power.
* Fiscal issues
From time to time, the government has to deal with huge fiscal issues caused by Congress or by decisions of the Judiciary. Recently, the Minister of the Economy, Paulo Guedes, spoke of the fiscal disaster related to the court-ordered payments as a result of court decisions against the federal government. The total payments due increased from R$ 55 billion this year to R$ 90 billion in 2022. In an effort to solve the problem, Guedes submitted a Constitutional Amendment Proposal (PEC) to Congress.
* Lessons learned from the Income Tax Reform
The government has found it extremely difficult to pass Income Tax Reform (ITR). Even though it is only an ordinary bill – which requires just a simple majority of votes to be approved – it deals with changes to the income tax for individuals and creates a tax on profits and dividends, which is causing it to face resistance in Congress. What lessons, therefore, can we draw from this matter?
* Tax Reform may be reduced to new Refis
Tax Reform is in danger of becoming irrelevant. As mentioned above, despite the efforts to seek changes, the scenario is not favorable for broad reform in this legislature. Congress already believes that the reform proposal may be restricted to a new debt refinancing program. The situation is complex, and time is of the essence.
* Vetoes of the LDO likely to generate friction in Congress
Vetoes of the LDO are likely to generate friction in Congress. In enacting the Budget Guidelines Law (LDO), President Jair Bolsonaro vetoed the provision on the amendments by the General Rapporteur on the Budget. This is an amount of resources reserved to the rapporteur for distribution among congressmen without the criteria required for the release of parliamentary amendments and due publicity.
* Doria gains strength as a third candidate
Even though the PSDB primaries are only going to be held in November, the governor of São Paulo, João Doria, has gained ground in the race. Last week, former President FHC, who has already publicly expressed his support for Doria, recorded a video supporting the governor of São Paulo.
Now read on...
Register to sample a report