Dino and Gilmar accompany Zanin for the suspension of the law that extends payroll tax relief

Ministers Gilmar Mendes and Flávio Dino followed Minister Cristiano Zanin’s vote in the judgment of the action that could confirm the suspension of the validity of sections of the law that extended the exemption from the payroll of municipalities and productive sectors until 2027 (14.784/2023) . Zanin responded to a request from the Attorney General’s Office (AGU).

The trial that can endorse the decision takes place in the virtual plenary, where there are no debates. If the suspension receives the approval of the majority of ministers (minimum of six votes), Zanin’s decision will take effect until the Supreme Court analyzes the merits of the action filed by the AGU.

The payroll tax exemption for 17 sectors and municipalities with up to 156 thousand inhabitants was approved by Congress, however, the bill was vetoed by President Lula. Then Congress overturned the veto. The federal government’s idea was to restore the rate of contributions to the National Insurance Institute (INSS) by companies covered by the benefit from 8% to 20%.

When suspending the sections, the minister argued that the law extending the exemption affects the principle of budgetary sustainability and justifies the immediate suspension of the benefit, considering it necessary to “avoid a true fiscal imbalance of billion-dollar proportions”.

Read more: ‘Government makes mistakes in judicializing politics’, says Pacheco about the STF’s decision to exempt taxes

At the beginning of the month, interlocutors from the Lula Government (PT) were already discussing the possibility of appealing to the STF to stop payroll tax relief, mainly for municipalities, contrary to the law enacted by the National Congress last year. The judicialization of the matter has been on the Planalto Palace’s agenda since parliamentarians enacted the law that extends payroll tax relief for the 17 industry sectors that employ the most, including city halls in this group, until 2027.

Still in December, the Minister of Finance, Fernando Haddad, and President Lula issued a provisional measure (MP) blocking the effects of the law. On April 1, however, the main parts of the proposal expired as determined by the president of Congress, senator Rodrigo Pacheco (PSD-MG), who decided to maintain the law as the Chamber and the Federal Senate approved last year.

The economic team’s main argument against tax relief for municipalities is that the ordinary law approved by Congress does not indicate how the government will compensate for the resources it will no longer collect from city halls. Planalto also claims that this exemption would generate losses to the Union budget and violate the principle of fiscal responsibility.

Pacheco’s reaction
After seeing the points of the law being suspended, the president of the National Congress, senator Rodrigo Pacheco (PSD-MG), brought together Senate leaders and lawyers to study a possible reversal of the order. Shortly after the decision was published, Pacheco criticized the federal government. “The federal government makes the mistake of judicializing the policy and imposing its own reasons, in an apparent third round of discussion on the issue of payroll tax relief,” says Pacheco, in a note.

Upon arrival at the meeting, senator Efraim Filho (PB), who is leader of União Brasil, said that parliamentarians should appeal to the STF and their own benches in Congress to maintain the law enacted last year. “Two actions will be taken. A mobilization in the legal context to reverse the decision of the Federal Supreme Court and a political mobilization to enforce the sovereign decision of Congress in defense of those who produce and those who work”, he stated. “We believe that Congress’ decision is the right one, and we will try to demonstrate that,” he added.

Government leader in Congress, senator Randolfe Rodrigues (No party-AP) is also expected for the meeting at the official residence. Lawyers from the Federal Senate and legislative consultants will also participate in the meeting to articulate Congress’s legal strategy in favor of maintaining the law that extends the exemption.

Participate in Itatiaia channels: