Senate goes against STF decision that suspends payroll tax exemption | Economy

The Senate filed an appeal yesterday, through its legal counsel, against the decision of the Federal Supreme Court (STF) that suspended sections of Law 14,784, of 2023, which deals with payroll tax relief for companies and city halls until 2027.

When announcing the decision at a press conference, the president of the Senate, Rodrigo Pacheco (PSD-MG), made it clear that the disagreement is with the government’s attitude of “judicializing politics”.

“Our position is a position of antagonism, in this case, in relation to the federal government, to the Attorney General’s Office (AGU). We are, on the other side, trying to demonstrate our reasons, and it is up to the Federal Supreme Court to decide this.

The Court’s decision must be respected, whatever the decision. I hope that the Federal Supreme Court decides based on reality”, said the senator when refuting the arguments used by the AGU.

The preliminary decision, by Minister Cristiano Zanin, was granted in the Direct Action of Unconstitutionality (ADI) 7633, in which the President of the Republic, Luiz Inácio Lula da Silva (PT), questions the validity of provisions of the law relating to both the exemption for companies and city halls. The main argument is that the rule did not comply with the provisions of the Constitution regarding budgetary and financial impact.

For Pacheco, the government’s argument is not valid because, contrary to what was alleged, the project that gave rise to the law (PL 334/2023) provided for the estimation of the financial and budgetary impact “in a very clear, categorical and material way”.

He also recalled that the law only extended a benefit that already existed since 2011 and that a previous decision by the STF itself considers that there is no unconstitutionality in the case of an extension, since this impact had been foreseen when the benefit was created and that the financial support for the relief was a 1% increase on Cofins-Importation.

Author of PL 334/2023, senator Efraim Filho (União-PB) said he was against the resolution of the issue by the Courts, considering that the project was processed for ten months and was widely debated by Congress. For him, Congress did its part by approving the text. Judicialization, in the senator’s view, weakens politics. “The government has the basis and majority in Congress to approve its agenda. If the agenda that the government is indicating, to increase the tax burden and taxes, does not find support in Congress, I believe that it is up to the government to reassess where the balance point is”, stressed Efraim.

Increase in revenue

The president of the Senate recalled that the work of the National Congress made possible, in 2023, a significant increase in government revenue. This work began even before the current president took office, with the Transition PEC, which provided fiscal space for the new government’s projects.

Pacheco also cited as contributions from Congress the new fiscal framework, the new rules on decisions by the Administrative Council of Tax Appeals (Carf), the taxation of exclusive funds and offshores (companies or accounts opened in other countries, with lower taxation).

Other advances mentioned by the president of the Senate were the sports betting taxation project and the change in the subsidy regime. Therefore, he said he hopes the outcome will be fair for the municipalities and the economy, as “justice for the government and its revenue” has already been done by Congress.

Remember when Lula vetoed the project that extended payroll tax relief

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Sectors and municipalities warn of legal uncertainty

After Cristiano Zanin temporarily suspended sections of the payroll tax exemption, STF ministers Gilmar Mendes and Flávio Dino voted in favor of the decision. As a result, entities representing economic sectors and municipalities spoke out against the measure and warned of legal uncertainty in the country.

For Luiz Gastão Bittencourt, president of the Commerce Federation in Ceará (Fecomércio-CE) and state deputy for the (PSD), as the exemption matter has already been approved in the Chamber, vetoed by the Presidency of the Republic and overturned in Congress, the STF should not “get involved” in actions already resolved by Congress.

“So, as the president of the Senate is already appealing and there is an action that is being judged, I believe that, with this, it will accelerate the vote on this PEC that the decisions of the Supreme Court will not be able, in a monocratic way, to change the action and vote of the National Congress. Respect between the powers must be maintained and one must not overlap the other.”

Gustavo Taparell, partner at Abe Advogados and specialized in Tax Law, warns that as the suspension of the payroll tax exemption is immediate and the collection of employers’ social security contributions from companies occurs on the 20th of each month, if the suspension decision remains , taxpayers who pay next month will already suffer the consequences.

“The decision creates incredible legal uncertainty and the risk of dismissal of employees by companies in sectors that previously benefited. Furthermore, it will be important to follow the congress’ demonstrations on the issue. I imagine that the resolution of the issue will go through a new political discussion between the government, congress and STF.”

The president of the Parliamentary Entrepreneurship Front (FPE), Joaquim Passarinho (PL-PA), stated that the Lula government strains the relationship with the Legislature by judicializing the exemption. “In this sense, the judicialization of politics symbolizes a setback in social and economic terms,” ​​said the deputy.

The president of the Federation of Industries of the States of Minas Gerais (FIEMG), Flávio Roscoe, corroborates the idea that the injunction is a mistake and creates legal uncertainty. He refutes what the government argues, saying that the exemption law enacted at the end of last year is unconstitutional because it did not demonstrate, as required by the Constitution, the impact of the order of R$10 billion on the budget. “In practice, this amount was not foreseen in the budget, since the exemption has existed for a decade, so there is no suppression of revenue”, he highlighted.

The National Confederation of Municipalities (CNM) also repudiates the measure. For the entity, the Federal Government is working to withdraw an achievement estimated at R$11 billion per year by judicializing Law 14,784/2023. On the city hall side, the injunction bars the exemption of the employer social security contribution rate from the Municipalities to the General Social Security Regime (RGPS), which was endorsed by the National Congress twice for all Municipalities with up to 156.2 thousand inhabitants.

Another point argued by the CNM is that the Social Security situation in the municipalities is today one of the main financial bottlenecks for municipal administrators, who presented, in 2023, the worst primary result of the last decade. (Beatriz Cavalcante)