Approval of the new fiscal framework and tax reform are fundamental for the country, says Rodrigo Pacheco.

Fiesp Agency - The option of changing the spending cap regime to a different set of rules, the new fiscal framework, is seen by the president of the Federal Senate, Rodrigo Pacheco, as a sound measure that should be quickly approved by the National Congress.

The senator was invited by the president of Fiesp, Josué Gomes da Silva, to participate in the entity's board meeting on Monday morning (May 8), which also addressed the Tax Reform. He believes that approval will require more coordination, as it involves differing opinions, but also believes it should pass through both houses of Congress.

“Without a doubt, there is consensus that reform is necessary. The disagreements lie in the form, as they pit interests against each other between the public and private sectors, economic sectors, and in relation to federated entities. The art of tax reform must be one of compromise, not conquest,” Pacheco observed.

According to the Senate president, if Brazil follows the path of 170 other countries that opted for simplification and adopted the Value Added Tax (VAT), everyone will benefit.

According to the president of Fiesp, the 131 unions represented in the entity unanimously embraced the Tax Reform, understanding that the current tax system is exhausted. “It is dysfunctional and creates numerous distortions, in addition to removing the competitiveness of national industry. We need a structural reform that ensures growth for Brazil. The most conservative estimates point to an increase of 10 percentage points in GDP over the next 10 years with the adoption of VAT,” stated Josué.

He further stated that the new legislation will provide a better business environment, capable of attracting investments at a time when global value chains are repositioning themselves. "Brazil has taken little advantage of this opportunity. And, at this crucial moment for the country, the houses of the Brazilian legislature, especially the Federal Senate, have been able to build consensus."

Interest

At the end of April, the Federal Senate held a public hearing to discuss the issue of interest rates in Brazil. During the hearing, authorities such as the president of the Central Bank, Roberto Campos Neto, the Minister of Finance, Fernando Haddad, and the Minister of Planning and Budget, Simone Tebet, spoke on the topic.

The president of Fiesp, who was also in Brasília to present the perspective of the industrial sector, emphasized the importance of bringing the discussion to the daily lives of Brazilians, given the impact that monetary policy has on the lives of all citizens. "It is inconceivable that a country as rich as Brazil continues to practice interest rates much higher than the countries with which we compete on the international stage," lamented Josué.

He advocated for a reduction in interest rates so that the country does not diminish its growth capacity. "Brazil needs to break this cycle, or risk continuing to become poorer. If inflation cripples and exchange rates kill, interest rates impoverish." According to Josué, if Brazil's economy had grown at the same rate as the world average over the last three decades, the country would have a per capita income of US$22 today, on par with Portugal, and well above the current figure of around US$7.

According to Rodrigo Pacheco, with the imminent approval of the new fiscal framework and the Tax Reform, it would be absolutely possible to resume the policy of interest rate cuts from now on. "Obviously, respecting what was an achievement of ours: the freedom and autonomy of the Central Bank. However, lower interest rates are a desire of Congress and the productive sectors, as well as the Executive branch, because it will allow for the growth of the Brazilian economy and improvements in employment rates," he said.

The Senate president emphasized the house's commitment not to create difficulties for the government, for the good of the country, defended democracy, institutional stability, and harmony between the branches of government, but without subservience. "Anything that comes from the government as a setback will be postponed. That is not the way. The laws of the country are conceived by the National Congress, and with this idea of ​​seeking consensus we will find the way," concluded Pacheco.