Fux asks for a review and interrupts payroll tax exemption trial – Cities

STF (Supreme Federal Court) has five votes to maintain the individual decision of Minister Cristiano Zanin that overturned the exemption from payroll taxes in 17 sectors of the economy and certain municipalities until 2027. The Court began judging this Friday (26) in the virtual plenary whether Zanin’s injunction will be endorsed.

So far, the voting score is 5 votes to 0 for maintaining the decision, which was motivated by an action by the Attorney General’s Office, the body that represents the federal government in court.

In addition to Zanin, the votes were cast by ministers Flávio Dino, Luís Roberto Barroso, Gilmar Mendes and Edson Fachin. Despite the votes, the trial was interrupted by a request for a review made by Minister Luiz Fux. There is no date for the resumption of the trial. The suspension of the exemption remains in effect.

In the action filed with the STF, the AGU maintained that the exemption was extended until 2027 by Congress without establishing the financial impact of the tax exemption. The petition was signed by President Luiz Inácio Lula da Silva and the Attorney General of the Union (AGU), Jorge Messias.

The action also contested the decision of the President of the Senate, Rodrigo Pacheco (PSD), which invalidated the section of Provisional Measure No. 1,202/2023. The MP overturned social security exemptions for small and medium-sized municipalities.

By accepting the AGU’s arguments, minister Cristiano Zanin understood that the approval of the exemption by Congress did not indicate the financial impact on public accounts.

“The factual framework presented, including the issuance of subsequent provisional measures with the aim of reducing the imbalance in public accounts, indicates, in this preliminary judgment, that there is an urgency to avoid a true fiscal imbalance of billion-dollar proportions that will be difficult to resolve if control comes to be done only at the end of the judgment on the merits”, explained Zanin.

Earlier, the Senate appealed Zanin’s decision and asked the minister to reconsider his decision.

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