2023-07-13 21:34:19
By: Diego Cruz
Under the justification of “simplifying” taxes, the government approved, last week, the PEC 45 (Proposal for Constitutional Amendment) of tax reform in the Chamber of Deputies. If in the days prior to the vote the proposal still aroused occasional polemics in the agribusiness or retail sectors, the final version of the text was practically a consensus among the bourgeoisie, Fiesp (Federation of Industries of the State of São Paulo), Febraban (Brazilian Federation of Banks), among other bourgeois and employer entities that joined the campaign for its approval.
The voting score, 382 against 118, expresses this unity, with votes ranging from the entire base of the government, from the PSOL (with the exception of three parliamentarians who abstained) to Bolsonaro’s PL, which was divided and guaranteed 20 votes for the measure. The initial opposition of governors and mayors was defeated, and the reform was ardently defended by the Bolsonaro member, Tarcísio Freitas. The articulation of Arthur Lira and the rapporteur Aguinaldo Ribeiro (PP-PB), who helped the Lula government to distribute the record value of R$ 8.65 billion in amendments, consolidated this result.
The text of the PEC originates from a proposal by the MDB leader, Baleia Rossi, from 2019. Taken by Lula and Haddad, the measure became a priority in the government’s economic policy, along with fiscal adjustment. But what is behind this reform? Do you intend to simplify taxes and help the poor, as the government says? Does it aim at “efficiency”, as the Bolsonaristas who voted in favor claim? Will it serve to appraise private jets, as the PSOL says?
more regressive
To begin with, it is important to understand that this reform falls on consumption, and today almost half of the collection comes from consumption taxes. This is one of the main reasons why the tax burden is so regressive in the country, that is, it disproportionately burdens the poorest families, since a greater part of the income is paid in taxes.
The great property, the millionaire dividends that companies like Petrobras pay and that are sent abroad, as well as the profits of the multinationals, are not touched. On the other hand, the Income Tax is still outdated, falling unequally on the lowest wages and exempting billionaires.
Furthermore, the exemptions and reduction in the rate are extended to the agro-export sector, both in the purchase of pesticides and in the export of primary products, both agricultural and mining, reinforcing the semi-colonial character of Brazil. The tax reduction would also affect the entire production chain, benefiting large companies and multinationals. And all of this will end up in the consumer’s final bill, that is, falling, once again, on the poorest.
What does the reform text say?
The reform unifies federal taxes (IPI, PIS and Confins), state and municipal taxes (ICMS and ISS) into two “IVAS” (Value Added Tax): CBS (Contribution on Goods and Services), managed by the federal government, and the IBS (Tax on Goods and Services), in charge of the states and municipalities. The principle of this redesign is to transfer all the taxes that affect the different phases of production to the end of the chain, the final consumer.
VAT will then have a “base” rate for everyone. How much will it be? Nobody knows. The Secretary of Tax Reform, a position created by the government especially for this reform, Bernard Appy, estimated at 25%, without the exemptions and rate reductions approved in the Chamber. But the reform creates three rate bands: the general rate, the zero or reduced rate, and the differentiated rate, which will pay more in the case of products such as cigarettes or alcoholic beverages. The indices must be defined in the Senate.
The sectors that will benefit from the 60% reduced rate are: private education and health, medicines and medical products, public transport, agricultural products and inputs (including agrochemicals), extractive products, security goods and services, as well as artistic productions, cultural and journalistic Some modalities of medicines and medical products, basic basket products (which will still be defined by a bill), and private higher education linked to Prouni will have a zero rate.
The real meaning of reform
Like the fiscal framework, the tax reform was designed to last for decades, starting in practice in 2029 and counting on a long transition period that, in the case of compensation to States and municipalities, reaches 40 years. And their logic is to disgrace the bourgeoisie and throw even more the tax burden on the backs of the working class and the middle class. It directly reduces taxes on agribusiness and the extractive sector, in addition to extending the exemption to churches which, in the text approved by the deputies, now benefits “religious entities”, being able to house all kinds of companies there.
But, beyond that, by ending the so-called cascade taxation, which taxes the same product at different stages of production, in the end it will end up relieving the total tax burden that the bourgeoisie pays today. Both directly eliminating the tax, as in the case of the IPI, and through tax credits that will allow entrepreneurs to reduce rates throughout production. It is still unknown exactly how much this debasement will be (at least we, the population, because surely the accountants of multinationals and agribusiness already have detailed sheets at this time), but this is the expectation, and precisely for this reason there was such a broad impulse of capital around the project.
And the government is not going to simply give up these resources, remembering that all the effort involved in relation to the fiscal framework is to maintain and continue guaranteeing the payment of interest to the bankers. In other words, any “tax loss” is out of the question. Workers and the middle class will pay for this, through a VAT that, according to estimates, will be the highest in the world, around 30%. The final consumer will pay, thus, for the disgraces of the bourgeoisie, both those included in the project and the reduction of the total taxes paid by the bosses, as well as the possible exemptions that, supposedly, would benefit the poorest, such as the basket food staple.
This means that the people will pay for the total reduction of the tax burden on the bourgeoisie, they will pay for agrochemicals in agribusiness, the commodities for export, it will bank the companies of Edir Macedo, private health and education used by the richest, and even the debasement of the basic basket. And even that does not guarantee that the basic food basket will be cheaper because, historically, the agricultural and retail sectors have always pocketed tax reductions instead of transferring them to prices. The truth is that any tax that disappears or is reduced in the productive chain will appear at the end, for the final consumer to pay.
The “cashback” or reimbursement
One of the main points announced by the government is the creation of a “cashback” for the poorest families. The term was created by banks and companies, and means the return of part of the money spent, in the form of credit or even products. The idea in this tax reform would be to return part of the taxes paid by families registered in the Single Cadastre, that is, beneficiaries of social programs. Instead of completely deconstructing consumption and reducing the regressivity of the tax system, it would be a policy “focused” on the most miserable families, diluting this cost on the whole of VAT. That means taxing the poor and the middle class more, or giving to the poorest with one hand and taking away from the working class as a whole with the other.
And even that is not guaranteed with this reform approved by the Chamber, since the value or the products affected by the measure will be defined by a complementary law.
The valuation of the “jatinhos” [jets privados]
To justify their vote for the tax reform, PT and PSOL parliamentarians spread on social networks that now the jets and yachts of the rich will pay the same IPVA as cars. If this were really implemented, the amount collected, according to the projection of the National Sindifisco in 2020, would be R$ 4.7 billion. Something almost deadpan overall, which wouldn’t alter the regressiveness of the system or soften the fact that billionaires don’t pay taxes. But even that will not happen because the text voted by the deputies includes so many exceptions that it will not be difficult for a yacht owner to classify his vehicle in one of the many exempt categories: passenger transport, fishing, for scientific purposes, etc.
Who wins and who loses
The bourgeoisie as a whole wins from the tax reform, since, in general, they will pay less taxes. It will also save on the intricate process that exists today to evade taxes, and that generates significant costs in tax defense, for example, since it will be institutionalized. The agribusiness and mineral export sectors also benefit, as do private health and education. The bankers win, for example, indirectly, since the financial sector controls a large part of the agribusiness, and directly, since they will maintain the guarantee of interest payments on the debt, which today consumes almost half of the budget.
The mayors and governors win, since the States will maintain a certain autonomy to create taxes, and they will still have a fund of R$ 40,000 million to compensate for eventual losses in the coming decades. And, mainly, those of the richest regions, since the taxes will be collected at the final destination.
Lastly, the working class and the middle class lose, since they are already responsible for more than 47% of the collection that today affects consumption, and whose value should rise even more as they have to bear the disgrace on the whole of the bourgeoisie.
Also read, on this same site:
For a worker economic plan for Brazil
The economic policy of the Lula government caters to the rich
Article published in www.pstu.org.br
Translation: Natalia Estrada.
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