Four ministers accompanied the rapporteur, Cristiano Zanin, to suspend the effects of the law until the action is judged
The STF (Supreme Federal Court) has 5 votes to maintain the decision of minister Cristiano Zanin who suspended the validity of sections of law 14,784 of 2023, which extended the payroll tax exemption for municipalities and productive sectors until 2027. Ministers Gilmar Mendes, Flávio Dino, Roberto Barroso and Edson Fachin accompanied the rapporteur for maintaining the injunction.
The analysis began in the Court’s virtual plenary session at 00:00 and will continue until May 6 if no minister presents a request for review (more time for analysis) or highlighting (to take the case to the physical plenary). In this modality, ministers cast their votes in the electronic system and there is no discussion.
Zanin’s decision is now valid. If endorsed by the other ministers, it will be in effect until the STF judges the action definitively. He defended the maintenance of his preliminary decision that meets part of the requests made by the government that Luiz Inácio Lula da Silva (PT).
The minister, who was once Lula’s lawyer, states that it is necessary to reconcile public accounts and fiscal balance. Zanin also considered valid the argument of the AGU (Attorney General of the Union) that the Senate did not demonstrate the financial impact of extending the exemption, which would go against the Federal Constitution. Articles 1, 2, 4 and 5 of law 14,784/2023 were suspended.
Find out in this report which 17 sectors have been reburdened and the fiscal impact that the waiver has on the government’s coffers.
LULA REQUEST
The minister’s decision responded to a request from the AGU, which is also signed by Lula, filed the day before. 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 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).
