Zanin responds to Lula and suspends payroll tax exemptions for companies and city halls; Pacheco criticizes decision

BRASILIA – The minister Cristiano Zaninof Federal Supreme Court (STF)responded to the request of the government and suspended sections of the law that extended the payroll tax relief of municipalities and productive sectors until 2027. He is the rapporteur of the case. The decision was criticized by the president of the Senate, Rodrigo Pacheco (PSD-MG), who said that the government “errors by judicializing politics”.

The measure is provisional and will be taken to the virtual plenary referendum starting this Friday, the 26th. The action was filed on Thursday, the 24th, and signed by President Lula himself, in addition to the Minister of General Advocacy of the Union (AGU) , Jorge Messias. The government claimed that the law, enacted at the end of last year, did not demonstrate the financial impact of the measure, as required by the Constitution.

The minister accepted the AGU’s argument and considered that, without an indication of the budgetary impact, “a significant imbalance in public accounts and an emptying of the constitutionalized fiscal regime” could occur.

“In line with what this STF has repeatedly decided, I note that this necessary compatibility of laws with the new tax regime results from a legislative option. It is not up to the STF to make a judgment of convenience and opportunity regarding the content of the normative act, but only to act in its role as judicial reviewthat is, to verify whether the enacted law is compatible with the Federal Constitution”, stated Zanin in the decision.

In the action, the government asked Zanin, appointed by President Luiz Inácio Lula da Silva (PT) to the Court, to be rapporteur for the process. This is because he already reports another action, presented by Novo, which challenges the government’s provisional measure (MP) that established the re-encumbrance.

Normally, the actions that come before the Court are drawn, except when other cases discussing the same topic are already being processed. In these cases, the process is distributed by “prevention” to the minister who is already the rapporteur for similar actions.

In a note, Rodrigo Pacheco stated that the government “erred by judicializing the policy and imposing its own reasons, in an apparent third round of discussion” about the payroll tax exemption.

Pacheco referred to the decision of Minister Cristiano Zanin, of the Federal Supreme Court (STF), which responded to the request of the Executive Branch and suspended sections of the law that extended the payroll tax exemption for municipalities and productive sectors until 2027.

“I will also take care of political measures that ensure that Parliament’s option for maintaining jobs and the survival of small and medium-sized municipalities is respected”, stated the president of the Senate.

Pacheco said that this Friday, the 26th, he will meet with the Senate Consultancy and Advocacy and that he will call an extraordinary meeting of leaders to address the matter.