Haddad Makes Brazil’s Tax Reform a São Paulo Campaign Fight
Brazil · ELECTION 2026
Key Facts
- —Date Haddad attacked Flávio Bolsonaro over Brazil’s tax reform on 26 August 2026.
- —Record Flávio Bolsonaro voted against the amendment in the Senate justice committee in November 2023.
- —Rate the IBS committee projects a combined 27.91%, above the 26.5% legal cap.
- —Timetable the new consumption taxes start being charged in 2027 after a 2026 test year.
- —Vote Brazilians choose president and governors on 4 October, with runoffs on 25 October.
The São Paulo race has turned the country’s consumption tax overhaul into a fight about jobs and dates.
Fernando Haddad said on 26 August that he was indignant at Flávio Bolsonaro’s opposition to Brazil’s tax reform. He also faulted São Paulo Governor Tarcísio de Freitas for saying nothing about it.
What Haddad said in Ourinhos
Fernando Haddad spoke to Rádio Melhor FM in Ourinhos, in the São Paulo interior, on 26 August. The Workers’ Party candidate for governor used the interview to attack the opponents of Brazil’s tax reform.
Eu fico indignado do Flávio Bolsonaro estar contra a reforma tributária e o governador de São Paulo não falar nada a respeito. In English: I am indignant that Flávio Bolsonaro opposes the reform and the governor of São Paulo says nothing.
Haddad also said the reform ends the fiscal war between states: a reforma tributária acaba com a guerra fiscal. He argued states could no longer pull factory jobs away from each other.
Haddad warned that suspending it could cost São Paulo jobs for another ten or twenty years. He blamed rival state incentives for the long decline of industry there.
Where Flávio Bolsonaro stands
Flávio Bolsonaro is a Rio de Janeiro senator and the presidential candidate of the Liberal Party, the PL. His party convention confirmed the candidacy on 25 July 2026.
The record backs Haddad on the vote: Flávio Bolsonaro opposed the amendment in the Senate justice committee in November 2023. He was one of six members voting against, alongside Sergio Moro and Rogério Marinho.
In September 2025 he voted against the second regulation bill, approved by 51 votes to 10. That bill became Lei Complementar 227, signed on 13 January 2026.
InfoMoney quoted him in August 2026: Votei contra a reforma tributária porque estava óbvio que aumentaria demais a carga tributária. That means he voted against it because the tax burden would clearly rise too much.
The plan to suspend or rewrite it
Flávio Bolsonaro said in June 2026 that he would suspend the reform for one year if elected. He made the case at an event of the Confederação Nacional da Indústria, the national industry body.
His campaign coordinator, Senator Rogério Marinho, said in May that a constitutional amendment bill would delay the start. Marinho’s words were: precisamos dar uma sustada, uma sobrestada nesse processo.
In English, that means the process needs a calm pause so its distortions can be fixed. Marinho later said it was not about paralysing or ending the reform, only correcting it.
What Tarcísio de Freitas has actually said
Haddad’s claim about silence is a campaign charge, and a non-statement is hard to prove. The public record does show where Tarcísio de Freitas has stood on the reform.
In July 2023 he backed the proposal and said his government agreed with 95% of it. His words then were: a gente concorda com 95% da reforma.
At a Valor, O Globo and CBN interview on 20 August 2026 he defended his state tax incentives. He said tax expenditure had fallen from 35% of net current revenue toward 30%.
Coverage of that interview reported he still supports the reform while questioning its rate and management council. He is seeking re-election for Republicanos and has endorsed Flávio Bolsonaro for president.
The law behind the overhaul
Brazil’s tax reform rests on Emenda Constitucional 132, a constitutional amendment promulgated in December 2023. It replaces five federal, state and municipal consumption taxes with a dual value-added tax.
The federal half is the CBS, the Contribuição sobre Bens e Serviços, or contribution on goods and services. The state and municipal half is the IBS, the Imposto sobre Bens e Serviços, or tax on goods and services.
Lei Complementar 214, signed on 16 January 2025, is the main rulebook for both taxes. It also created the Imposto Seletivo, an excise on goods harmful to health or the environment.
Lei Complementar 227 followed on 13 January 2026 and created the Comitê Gestor do IBS. That committee, known as the CGIBS, will run collection and share revenue between states and municipalities.
What changes in 2026 and 2027
This year is a test year, with a combined rate of 1% on invoices. The split is 0.9% for the CBS and 0.1% for the IBS.
Companies offset those amounts against existing federal contributions, so the burden does not rise. The aim is to test invoicing and reporting before real money changes hands.
Real collection of the new consumption taxes begins in 2027, when the CBS takes over federal ground. The IBS then rises in steps between 2029 and 2032.
ICMS, the state Imposto sobre Circulação de Mercadorias e Serviços, ends in 2033. ISS, the municipal Imposto sobre Serviços, ends then too, leaving the dual value-added tax alone.
The rate question and the split payment delay
In August 2026 the CGIBS published Resolution 14 with a projected reference rate of 27.91%. That is 18.7% for the IBS and 9.21% for the CBS.
The figure sits above the 26.5% ceiling written into Lei Complementar 214. If the sum exceeds that ceiling, the federal executive must send Congress a corrective bill.
The committee stressed these are planning projections, used to estimate about R$5.15 billion (US$998 million) in IBS revenue for 2027. Conversions use the Banco Central do Brasil PTAX selling rate of 5.1604 reais on 26 August 2026.
Split payment, which routes tax straight to the state at settlement, will not start in January 2027. Pricilla Santana, vice-president of the IBS committee, called it one of the most complex tools to implement.
Why the fight matters for the vote
Brazilians vote on 4 October, with second rounds on 25 October where no one wins outright. Free radio and television campaign time starts on 28 August.
Datafolha put Tarcísio de Freitas on 45% and Haddad on 27% in São Paulo on 21 August. The poll interviewed 1,610 voters on 18 and 19 August, with a two-point margin of error.
Haddad left the Finance Ministry in March 2026 to meet the deadline for candidates who hold office. Dario Durigan replaced him and now runs the federal side of the changeover.
For investors, Brazil’s tax reform is the largest change to Brazilian indirect taxation in decades. The campaign has now made its timetable, not just its rates, an open political question.
Frequently Asked Questions
What did Haddad say about Brazil’s tax reform?
On 26 August 2026 he said he was indignant that Flávio Bolsonaro opposes Brazil’s tax reform. He added that the governor of São Paulo says nothing about it.
Did Flávio Bolsonaro really vote against the reform?
Yes, twice. He voted against it in the Senate justice committee in November 2023 and against the second regulation bill in September 2025.
When do the new consumption taxes actually start?
A combined 1% test rate applies through 2026. Real collection begins in 2027, though split payment will start as voluntary and business-to-business only.
Connected Coverage
Flávio Bolsonaro’s Government Program to Feature Courts, Minerals and Term Limits
Brazil’s Dario Durigan Pledges a Fiscal Squeeze if Lula Wins Again
Sources
- www.noticiasaominuto.com.br
- timesbrasil.com.br
- www.infomoney.com.br
- www.otempo.com.br
- www.congressoemfoco.com.br
- www.poder360.com.br
- www.noticiasaominuto.com.br
- www.terra.com.br
- www.gazetadopovo.com.br
- timesbrasil.com.br
- www.gov.br
- agenciabrasil.ebc.com.br
- www12.senado.leg.br
- fenacon.org.br
- www.dcomercio.com.br
- agenciabrasil.ebc.com.br
- www.infomoney.com.br
- www.tre-sp.jus.br
- olinda.bcb.gov.br
- www.riotimesonline.com
- www.riotimesonline.com
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error
Read More from The Rio Times