Lula's government is considering going to the Supreme Court regarding the Re-taxation Provisional Measure.
If the Senate president returns the provisional measure, the federal government may try to overturn the decision in the Supreme Court or strike down the law that extended the tax exemption policy.
247 - The Planalto Palace is preparing to adopt a legal strategy should the president of the Senate, Rodrigo Pacheco (PSD-MG), decide to return the provisional measure that seeks to gradually eliminate tax breaks for 17 labor-intensive sectors. The proposal was sent by the government to Congress on December 29, triggering a series of reactions and intense debates.
Although the government intends to continue negotiating with parliament, the Presidential Palace has already prepared two legal actions that can be filed with the Supreme Federal Court (STF) if the political alternative is unsuccessful, reports Malu Gaspar of the newspaper. The GlobeOne of these actions seeks to annul any eventual return of the provisional measure by Pacheco, while the other aims to overturn the law that extended the tax exemption policy.
The provisional measure in question was sent to Congress without prior coordination, 15 days after lawmakers overrode a veto by President Lula (Workers' Party) on the measure. This government decision sparked backlash even among members of the coalition, who interpreted it as an attempt to circumvent a decision already made by Congress on two previous occasions: in October, when the tax exemption was approved in the Senate, and in December, when the veto was overridden.
Finance Minister Fernando Haddad (PT) considers ending the tax exemption a priority to increase government revenue and meet the 2024 fiscal target. According to Finance Ministry calculations, ending this tax benefit could result in an extra R$ 6 billion in revenue for the federal government. Currently, the exemption allows 17 labor-intensive sectors to pay reduced rates on gross revenue, instead of 20% on payroll. The text sent to Congress also limits the offsetting of tax credits and eliminates by 2025 the tax benefits granted to event promotion companies through the Emergency Program for the Recovery of the Events Sector (Perse).
Faced with resistance in Congress, Pacheco is considering returning the provisional measure to the Planalto Palace. Discussed alternatives include waiting for the government to backtrack before sending a new text to the Senate or transforming the provisional measure into a bill with constitutional urgency. However, the government's preference is for negotiation, considering that an appeal to the Supreme Federal Court (STF) could further strain relations between the three branches of government, already strained by other recent decisions by the Court.