In a document delivered to the proposal’s rapporteur, the Court recommends the inclusion of a provision requiring exceptions to the standard tariff to be subjected to an annual cost-benefit analysis between 2026 and 2033
BRASÍLIA – The Federal Court of Auditors (TCU) wants the list of sectors and activities that will benefit from the reduced rate provided by the tax reform proposal to be subjected to an annual evaluation of the cost-benefit ratio of the differentiated treatment.
In a document delivered to the proposal’s rapporteur, Senator Eduardo Braga (MDB-AM), the TCU recommends the inclusion in the Constitution of a provision providing that exceptions to the standard rate of the new value added tax (VAT) are subject to this rule every annual sieve between 2026 and 2033.
The analysis will be used so that, ten years after the approval of the reform, in 2034, Congress evaluates whether or not it is worth maintaining the exceptions. This is one of the most sensitive issues in the negotiation of the proposal in the Senate, since several sectors and activities that did not benefit in the House are lobbying for the Senate to also enter the list of exceptions – among them, sanitation, recycling and power. .
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According to the text of the PEC approved by the Chamber, it will be up to the TCU to define the standard rate, which acts as a reference for the two taxes that will arise from the reform: the CBS (from the Union) and the IBS (States and Municipalities). Each State and Municipality can set its own tariff, but this must be the same for all goods and services (except those on the list of exceptions). Hence the effort of many of them to obtain a “place” on this list, which is included in the constitutional text.
In the 144-page document, the TCU also reported that it had recalculated the standard rate and had achieved the same results as the Ministry of Finance. In the study released in August, the Treasury estimated that, in a scenario defined as “feasible”, the rate would be 25.45%. In a “conservative” scenario, 27%. Without exception, the rate would be between 20.73% and 22.02%.
In the report, the TCU states that the best model to promote growth is one that has a broad base, covering all final consumption and a single tax rate.
“Regarding the cost of exceptions, major studies show that rate reductions and exemptions from consumption taxes are not effective solutions as public policies, either from an economic or a social perspective. Furthermore, much of the tax benefit is not transferred to the final taxpayer”, specifies the TCU in the document, delivered personally by its president, Bruno Dantas.
For the Court, exemptions and reduced rates are not the most effective way to reduce inequalities and clearly benefit richer families over lower income categories of the population.
Federation Council
The TCU also suggested the creation of a collegial body of the courts of auditors to exercise external control of the IBS Federative Council, the body that will manage the collection of the IBS. The Court of Auditors also proposed that the text of the PEC expressly contains the provision that the IBS and the CBS be established jointly in the same complementary law.
The Court also proposed that the tax reform provide for the creation of a collegial body of courts of auditors to exercise external control of the Federative Council. This body could hold quarterly meetings, according to the TCU, to judge external oversight processes on the board.
“There is therefore no need to talk about the creation of new posts. It would simply be an additional task for the members of the Courts of Auditors who are part of it,” he said.
With the conclusion of the public hearings phase of the Constitution and Justice Committee (CCJ), the rapporteur has informed that he will focus his efforts on producing the text of his report. On Wednesday evening Braga met with the Minister of Finance, Fernando Haddad, who promised to participate directly in the negotiations in a more active way next week.
The rapporteur took advantage of the thematic hearing with the representatives of the National Front of Mayors (FNP) and the National Confederation of Municipalities (CNM) to defend himself from the criticisms he suffered in the negotiation process. “In the last 100 days what I have done most is listen. I have personally attended more than 100 hearings in the office. The technical team has already granted more than 250 hearings. They are requests from Municipalities, States, production sectors. Of all the types and all nature,” he said.
Braga admitted that now will be the time to negotiate amendments to finalize the text of his report.
Source: Terra
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