Lula appealed to the STF on Wednesday (April 24) asking for the law to be unconstitutional; the injunction will be analyzed by ministers on Friday (April 26)
Minister Cristiano Zanin, from the STF (Supreme Federal Court), granted this Thursday (April 25, 2024) an injunction that suspends the effectiveness of sections of law 14,784 of 2023, which extended the payroll tax exemption for 17 sectors of the economy until 2027. The decision responded to a request from the government of Luiz Inácio Lula da Silva (PT) filed on Wednesday (April 24)
Zanin, who previously acted as the PT member’s lawyer, took the decision to the Court’s virtual plenary for a referendum on Friday (April 26). If validated by the other ministers, in the modality where they only cast votes, it will take effect until the STF judges the merits of the action. The trial begins at midnight on Friday (April 26).
In the decision, Zanin says that there is no indication of the budgetary impact and indicates that there is a risk of a “significant imbalance in public accounts and an emptying of the constitutionalized fiscal regime”. Articles 1, 2, 4 and 5 of law 14,784 were suspended. Here is the full decision (PDF – 294 kB).
In the request sent to the STF, the government does not indicate the number of sectors in which the exemption could be considered unconstitutional. Mention only in areas “without adequate demonstration of the financial impact”.
The government wants to end tax benefits for companies to increase revenue. The Minister of Finance, Fernando Haddad, had already signaled that he would take the issue to court.
Releasing a sector means that it will have a reduction or exemption from taxes. In practice, it makes hiring and maintaining employees cheaper in companies. Defenders of the mechanism say that this type of practice heats up the economy and promotes job creation.
The exemption for small municipalities is also included in the action sent to the Supreme Court. Currently, it is valid for those with up to 156.2 thousand inhabitants. In this case, the AGU (Advocacia Geral da União) also does not cite numbers and talks about unproductivity.
The AGU action also requests that MP (provisional measure) 1,202 of 2023 be considered constitutional. The text aimed to increase revenue through some initiatives, such as the gradual end of Perse (Emergency Program for the Resumption of the Events Sector) and tax relief.
According to the government, maintaining the mechanism goes against principles of the Federal Constitution, the Fiscal Responsibility Law (complementary law 101 of 2000) and the Budget Guidelines Law. Here is the full government request (PDF – 13 MB).
UNDERSTAND THE EXEMPTION IMPASSE
Haddad wanted to end the benefit through the provisional measure. After the negative reaction from congressmen and entities, the government took the issue to the Legislature in search of a partial victory – which did not happen for the exemption.
The idea was to debate the issues in Congress through a bill so that there would be a middle ground between the economic team and congressmen on the subject. The proposal, however, did not advance and the government removed the urgency of the text sent for analysis by the Legislature.
The rapporteur of the project being processed in the Chamber, federal deputy Any Ortiz (Cidadania-RS), said that the new project on the topic would maintain the same format as the original – the exemption would remain until 2027 for the 17 sectors.
In January, the Treasury said that the impact on tax waivers of the payroll tax exemption on the 17 sectors would cost R$12.3 billion to the public coffers in 2024.
