On Friday (15/12), the plenary of the Federal Chamber approved a proposal that changes the rules for benefits granted through the Tax on Circulation of Goods and Services (ICMS). This fact represents a victory for Lula’s (PT) government, which is in a hurry to approve the initiative in the final stretch of the legislative year. This was an important victory for the government’s economic sector and comes in the midst of two major political defeats, the overturning of the vetoes on the time frame and the payroll tax exemption.
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Tax on Circulation of Goods and Services (ICSM)
Changing ICMS benefits is seen as the measure with the greatest potential to balance the 2024 Budget and reduce the deficit in next year’s public accounts. According to the Ministry of Finance, the original text had the potential to generate R$35 billion in revenue in 2024. However, this Friday’s vote only took place after the Minister of Finance Fernando Haddad had conceded on several points, which calls into question the revenue potential of the measure.
Defeats
This potential victory came only after the government had a series of defeats in a Congress session, on Thursday (14/12), when presidential vetoes were overturned, including the time frame bill, in the new rules of Carf (Administrative Council of Tax Appeals), in the new fiscal framework, payroll tax relief and others.
Among the most prominent, mainly because it affects government revenue next year, is the overturning of the veto on payroll tax relief, which benefits 17 sectors of the economy. The measure was created during the Dilma Rousseff (PT) government in 2011 and it had successive extensions. It allows the payment of rates of 1% to 4.5% on gross revenue, instead of 20% on the Social Security payroll, which would stimulate the sectors and create jobs. Haddad stated on Thursday (14) that the Lula (PT) government must go to court.
The second most relevant was the overturning of the veto on the time frame for the demarcation of indigenous lands. According to this thesis, indigenous territories must be demarcated considering indigenous occupation in 1988, on the date of promulgation of the Constitution. It is defended by ruralists, who claim that the criterion would serve to resolve land disputes and provide legal and economic security for indigenous people and landowners.
