Brazil’s House of Representatives approves tax reform, significant victory for Lula

Brazil’s House of Representatives has approved the tax reform proposal, marking a significant victory for President Luiz Inácio Lula da Silva’s government.

The reform, which required a two-round vote, received a wide margin of approval in both rounds. The proposal will now proceed to the Senate for further consideration.

Deputy Aguinaldo Ribeiro played a key role as the rapporteur for the reform, presenting the full text of the opinion and the amendments made in the House.

The approval of the tax reform is one of the priorities of President Lula’s administration, alongside the Carf project and the fiscal framework.

The approval came after a record-breaking number of amendments were committed by congressmen in a single day, resulting in a significant budget allocation.

The majority of these amendments were for special transfers directly benefiting municipalities.

Before the vote, the President of the Chamber, Arthur Lira, delivered a speech emphasizing that tax reform should not be seen as a political game but as a crucial step for the Brazilian people.

He urged against political radicalism and criticized unfounded criticism of the reform and the legislative process.

Tax reform aims to unify federal, state, and municipal taxes, simplifying the current complex system.

The proposed reform includes creating a dual VAT for goods and services, establishing a national basic food basket, and forming a Federative Council to manage the collected funds.

The council’s decision-making process was modified to grant more power to Southeast states, representing a significant portion of the Brazilian population.

The latest version of the reform also reduced the tax rate for specific goods and services from 50% to 40%, benefiting sectors such as health services, education services, transportation, and essential products.

The tax reform will now proceed to the Senate for further deliberation and potential amendments before it can be enacted into law.

For the full picture, see our Brazil Tax Reform: Complete Guide.

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