Editorial: The STF in Lula’s fight for reinstatement

Not at all willing to listen to the voice of reason and put a brake on spending, the federal government only thinks about collecting more and more, and, to that end, it sees no problem in even overriding the decisions of the Legislature. Lula, through the Attorney General’s Office (AGU), resorted to judicialization — a tactic well known by dwarf left-wing parties when they want to promote their agendas — to try to extract more money from the productive sector and Brazilian municipalities.

Dissatisfied with the content of the bill approved by parliamentarians last year, which extended until 2027 the payroll exemption for 17 sectors of the economy, a proposal that before being approved was discussed for 10 months in Congress, Lula appealed to the Supreme Court Federal Law (STF), through an action by the Attorney General’s Office (AGU), contesting the constitutionality of the law and asking for its suspension. The action also questions the invalidation of a section of Provisional Measure (MP) 1,202/2023, which provided for social security reimbursement for municipalities with up to 156.2 thousand inhabitants.

Resorting to judicialization to override the decisions of the Legislature is something people do who do not know how to respect “the rules of the democratic game”, as President Lula himself said last year.

In response, minister Cristiano Zanin, appointed to the STF by Lula himself, promptly granted an injunction last Thursday (25) in response to the AGU’s request. The injunction will be submitted to the analysis of the other ministers of the Supreme Court, in the virtual plenary — the ministers will have until May 6th to present their votes. This Friday (26), Congress appealed Zanin’s decision.

It is not the first time that Lula has tried to override Congress’s decisions on the subject. Initially, Lula fully vetoed the law approved by parliamentarians, but his veto was overturned in December last year. Days later, the Minister of Finance, Fernando Haddad, issued the first MP to reinstate the payroll of 17 sectors of the economy and also municipalities — which was understood as an attempt by the government to circumvent the Legislature’s decision.

After pressure from parliamentarians and representatives of the affected economic sectors, the Executive gave up on reimbursing companies, issuing a new MP in February, without mentioning the productive sector, but providing that from April 1st the tax rate on the payroll charged to municipalities with up to 156.2 thousand inhabitants increased from 8% to 20%. But the president of the Senate, Rodrigo Pacheco, decided to let the MP “lapse”, not submitting it to Congress for a vote in a timely manner and, thus, making the proposal lose its validity.

Lula’s response, highlighting the little respect that the PT member has for the legislative process and the functioning of institutions, was to sue the Federal Supreme Court, claiming that the bill approved by parliamentarians last year would be unconstitutional. In the action, the AGU uses basically the same arguments as Lula’s veto of the project. The government claims that the measure does not demonstrate the financial impact, as required by the Constitution, the Fiscal Responsibility Law (LRF) and the Budget Guidelines Law – which Congress denies.

The government estimates that it will no longer collect R$10 billion annually through tax relief, money that could put “fiscal accounts at risk”. But the biggest risk, in fact, is the emerging legal uncertainty, in addition to the impact on job creation, consumer prices and public transport and freight rates. The companies have already made their tax plans, and were counting on the tax relief for the coming years, following the provisions of the law approved and sanctioned by Congress. This is what happens in any civilized country: companies plan their actions following what the legislation provides and hope that the laws do not change from one moment to the next, depending on the mood of the government or the Judiciary. There is no way, untimely, to want to shove yet another totally unforeseen tax increase down the throat of the productive sector.

The sudden end of the exemption may even have the opposite effect to what the government intended, which is to raise more revenue. To keep their accounts in order, companies may have to make a series of layoffs — and the reduction in formal employment results in a drop in revenue and an increase in government spending on unemployment insurance and other benefits. In other words, the plan could backfire and, instead of having even more money to spend, the government may have to pay out more.

Resorting to judicialization to override the decisions of the Legislature is something people do who do not know how to respect “the rules of the democratic game”, as President Lula himself said in a meeting with governors in January last year. “We lose something in the National Congress and, instead of accepting the rules of the democratic game that the majority wins and the minority fulfills what was approved, we turn to another instance to see if we can win. We need to stop this method of doing politics”, he said at the time. Lula should listen to himself and start putting his own advice into practice.

The habit of trying to overturn Congress’ decisions by appealing to the STF undermines independence and harmonious coexistence between the powers. The STF’s function is not to act as a supreme legislator, overturning on a whimsical basis what parliament decided to meet the requests of Lula or whoever else. Strictly speaking, it is in the Legislature that laws must be drawn up and discussed; It is the decision of parliamentarians, elected to represent the population in its various segments, that must prevail.

Certainly keeping the government’s accounts up to date is a fundamental issue — several times we have drawn attention in this space to Lula’s lack of regard for fiscal balance. But there is no justification for this aggression against the legislative process and lack of respect for institutions. As Senator Rodrigo Pacheco rightly considered, it is up to Congress to debate “how to increase revenue without sacrificing the taxpayer who produces and creates jobs, and where we can cut excess public spending”. It is not possible for the PT government to want to run over the Legislature.

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