Chamber of Deputies approves basic text regulating tax reform

The Chamber of Deputies approved, this Wednesday (10), by 336 votes to 142, the basic text of the Complementary Bill (PLP) 68/2024, which regulates the tax reform. The proposal details how the new regime for collecting taxes on the consumption of products and services will work, especially the rules for the Contribution on Goods and Services (CBS), the Tax on Goods and Services (IBS) and the Selective Tax (IS).

During the day of negotiations leading up to the vote, the maximum rate of the new tax collection system dominated the debate among parliamentarians. Estimated at 26.5% by the Ministry of Finance, it will apply to all products and services that do not receive any type of special treatment under the text that is approved by the National Congress.

The controversy surrounding the tax rate ceiling exists because the text establishes that government revenue from new taxes cannot decrease or increase in relation to the average of recent years, even under the current tax model.

This means that reducing the tax burden on products and services in some sectors would necessarily imply an increase in the tax burden for those who do not receive some type of benefit, impacting the final tax rate.

Finance Minister Fernando Haddad said that the fewer exceptions to the general rules, the better the new tax system will be. “The logic of the reform is to maintain the tax burden. The fewer the number of exceptions, the lower the tax rate. The greater the number of exceptions, the higher the tax rate. The technical position of the Treasury, looking at tax systems around the world, is that the fewer exceptions there are, the better,” he highlighted.

In the final stretch of negotiations with party benches, deputies who make up the working group that analyzed the bill reinforced the request that the standard rate not exceed the 26.5% level.

During his speech in the plenary, federal deputy Cláudio Cajado (PP-BA) highlighted that the text should avoid concessions that would cause the final tax rate to rise even further. The parliamentarian explained that, to ensure this, the members of the WG added a lock to the project to prevent the rate from exceeding 26.5%.

“We created a trigger so that this tax burden does not increase, starting in 2033. This is because we like good intentions, but when it comes to government, whether federal, state or municipal, the desire to collect taxes speaks louder when difficult times arrive. Therefore, this project innovates by creating a trigger so that this burden never exceeds 26.5% as a general tax rate,” he said.

Cajado also stated that the new tax system will be better than the current one, as it will simplify taxpayers’ lives and bring more transparency about the real weight of taxes in everyday life. “When you have the production chain selling inputs and goods, these are taxed and passed on, this is what is called cumulativity. We do not know how much tax is on a cell phone because it is included in the price of the product. After the vote on tax reform, we will have the price of the product and the tax on the side,” he stated.

After the approval of the basic text, the parliamentarians began to debate the highlights, which are suggested changes to specific parts of the proposal. The text will go to the Senate.

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