Brazil is a true tax asylum, with one of the highest tax burdens in the world and, furthermore, one of the most complex revenue systems. Simplifying this process is crucial. Reducing the burden should also be considered, but that is out of the question. Therefore, tax reform always discusses the possibility of simplification by merging existing taxes. This proposed constitutional amendment being voted on has that merit, but perhaps only that. Can it get any worse than it already is? It’s better not to believe in this nonsense…
To begin with, the urgency is bothersome. Some claim that this reform has been under discussion for two decades, but that is false: it wasn’t exactly this proposal from the rapporteur, filled with ideological patches. I know there are good and serious people, committed to the country, supporting the presented reform. But it serves as a warning to see who seems more enthusiastic about approving it: the PT, Boulos, the gluttonous centrist opportunists, Globo, and the congresswoman from Lemann. It is necessary to be suspicious.
On the opposing side, we have trade associations, more liberal lawmakers, and entities linked to agribusiness. It’s not very difficult to take sides here, let’s agree on that. Any tax reform will have distributive outcomes, and some groups will lose. It’s inevitable, given that the blanket is short. The fiscal pact must be altered, affecting the balance between municipalities, states, and the federal government. Economic sectors must also be affected, impacting banks, industry, commerce, retail, or agriculture. That’s part of the game, and no matter how good a reform may be, it won’t please everyone.
But this reform seems far from that. It has dangerous pitfalls, considering the context: we are talking about an authoritarian, centralized communist government that already rules over a veiled dictatorship in our country. Granting more arbitrary power to this federal government, even if diluted over time, is an invitation to the Venezuelan model that President Lula is so inspired by. Your PT party loves a “Conselhão” (Big Council), and this proposal brings exactly that: the creation of a Federal Council with excessive powers. In Russian, a council is called a “Soviet.”
In the new text presented by the rapporteur on Wednesday night, a provision was added stating that the calculation of the effective income tax should “reduce income, gender, or race inequalities.” This appears to be clearly unconstitutional, but who cares about these details in modern Brazil? The “fluffy” left rejoiced, and Deputy Tabata Amaral celebrated, which should make any classical liberal bristle with concern.
Lawyer Janaina Paschoal pointed out another issue, a “gem” found in the lengthy text: the Executive Branch will be able to increase tax rates without the approval of the Legislature. According to her, this provision is in the section that deals with federal taxes, and that is very dangerous as it leaves the door open for the PT government to “drain us dry.” Does anyone sleep soundly when giving a blank check to a member of the PT when it comes to taxing the people?
Professor Marcos Cintra, who participated in the design of the tax reform that Paulo Guedes intended to present, also considers the current proposal to be a great danger: “Anything goes, lack of transparency, lack of data and information, betrayals, last-minute changes of opinion, negotiations in dark rooms, and disrespect for the taxpayer.” According to him, the main problems are “centralization, bureaucracy, and a Christmas tree where the rapporteur hung any and every request, as long as it turns into a vote in favor of this pseudo-simplifying reform.”
If the PT, in agreement with Arthur Lira, releases billions from the “secret budget” to make this reform possible, that should already raise a yellow flag for everyone. Paulo Guedes’s guiding principle was “more Brazil and less Brasília,” while Lula clearly wants the opposite: an absurd centralization of resources and power in the federal government. Furthermore, the reform contains flawed ideological concepts, such as the subjective environmental tax, inspired by the globalist ESG movement, and the “sin tax” on items deemed “harmful to health.”
Given the enormous complexity of the subject and technical aspects that escape the layperson, it seems reasonable to accept that serious individuals will be both in favor and against the reform. Therefore, we should avoid the binary dichotomy that assumes anyone supporting this constitutional amendment is acting against Brazil in bad faith. However, after a brief analysis, considering the actors involved and their track records, as well as evaluating the pitfalls and open doors, I believe it is relatively easy to choose which side to take in this debate: I am against the tax reform presented by the PT government.
Indeed, Brazil’s tax system is incredibly complex. However, by simply looking at neighboring countries like Argentina or Venezuela, it becomes evident that things can indeed get much worse.