Pacheco overturns the reimbursement of municipalities in yet another defeat for the government

Photo: Marcos Oliveira/Agência Senado

The president of the Senate, Rodrigo Pacheco, rejected the part of the Provisional Measure related to the increase in the social security rate for municipalities with up to 140 thousand inhabitants. The MP, which was extended for 60 days, will no longer include this specific clause.

Pacheco argued that the use of MPs should not serve to quickly annul legislative decisions, which would violate the principle of separation of powers, a view supported by the Federal Supreme Court.

The measure would have increased the rate from 8% to 20%, starting this month, according to MP 1,202. Congress had approved a tax benefit for municipalities in the bill on payroll relief for 17 economic sectors. Despite a presidential veto having been overturned, President Lula issued a new MP that eliminated the benefit, causing discontent among parliamentarians.

Pacheco declared that changes to the payroll tax exemption must be made through a bill and signaled to the mayors that he would not allow the tax exemption to come into force.