By Silvano Alves Alcantara*
The debate over tax reform is recurrent in Brazil, especially where the tax burden has already reached 33% of the Gross Domestic Product (GDP).
But, an effective reform in line with the population’s wishes is far from happening, such as the reduction of tax rates, the simplification of tax legislation, and the transparency of the allocation of the amounts paid.
While the expected reform is still pending, minor adjustments in the tax area have been made over time, and several proposals have already been presented and filed; others are still active, such as PEC 110/2019, PEC 45/2019, and PL 3887/2020.
One of the priorities of the current Lula administration is to implement the long-awaited tax reform.
However, it is impossible to know if they will appropriate the existing proposals, which is unlikely, or if a new proposal will be submitted to the National Congress.
What is certain is that how it will be and its effects will depend on a lot of political stitching.
So, what can we expect from this much-talked-about tax reform?
I believe that the individual, in general, awaits the increase of the exemption range of the IRPF to at least three minimum wages.
As well as the relaxation of the contribution ranges so that, in the end, only the higher-income earners will be in the higher tax brackets.
One hope is that the Great Wealth Tax (IGF) will finally be instituted so that wealthy people can contribute a larger share.
It would be the simple application of two constitutional principles, the ability to pay, as stated in article 145, § 1, and tax equality, as indicated in article 150, I, giving unequal treatment to unequal cases, according to their inequalities, as Aristotle would say.
The legal entity, on the other hand, expects the increase in the annual billing of the Individual Microentrepreneur (MEI) to a level that allows it to explore its activity with dignity and, at the same time, generate more jobs, being, for example, optional to hire up to 5 employees.
A great expectation of the legal entity is to re-evaluate the tax regimes of Simples Nacional [National Simple], Lucro Presumido [Presumed Profit], and Lucro Real [Real Profit] concerning the billing, the calculation basis, and the rates charged.
As a citizen, I hope that a tax reform meets the population’s needs, which have been massacred in this area, and, it should be said, over time.
But as a tax lawyer, I am almost sure of an increase in tax claims, both in the administrative and judicial sphere, due to the unconstitutionality and legal omissions that may come.
As a “seer”, even if a more robust tax reform comes, I believe it will meet the real needs of the most varied market segments, such as services, commerce, industry, and individuals.
Still, they will simply be palliative, short-lived mechanisms, for we cannot forget that the “Lion” [a Brazilian metaphor for the IRS] is always voracious, and the State is always greedy.
*Post-graduation coordinator at Uninter.
With information from Gazeta do Povo