Senator Eduardo Braga of Amazonas, the rapporteur of the tax reform bill in the Senate, told legal news platform Jota that he should only present his draft of the bill by the end of next month.
Mr. Braga’s original timetable foresaw his report being presented this week — a deadline that was moved to next Wednesday (October 4) and now two weeks later. “There’s no way [to finish it sooner]. I imagine the final draft will be done between October 18 and 20 — more likely on the 20th,” Mr. Braga said this week.
The senator says there are more than 200 pending proposals to amend the tax reform package approved by the House in July.
The Senate held a hearing on Thursday on the tax reform, allowing representatives of local governments to voice their concerns about changes to the country’s labyrinthine tax code. While they appreciate the simplification to tax collection that the reform will bring, they fear losing revenue.
The tax reform will consolidate Brazil’s five multi-level consumption taxes into two: one federal levy (CBS) and one local (IBS) for states and municipalities. A transition period for the CBS will begin in 2026. Between 2029 and 2032, local taxes will be gradually replaced by the IBS.
A report from Brazil’s Institute for Applied Economic Research (Ipea) projected the reform’s impact on state and municipal revenues — simulating how much each of the 27 states and 5,568 municipalities would collect if the reform had already been in effect last year.
Ipea says 82 percent of municipalities and 60 percent of states are expected to increase their revenues if the tax reform is approved. Inequality among municipalities, as measured by the Gini index (which measures income concentration), would decrease by 21 percent.
“When we analyze who the winners are, we find that they are generally less developed states and poorer municipalities; 98 percent have a GDP per capita below the Brazilian average,” says Ipea. “Among larger cities, 59 percent of state capitals and 72 percent of those with a population over 80,000 inhabitants would see gains,” the study adds.
The Senate is expected to make several changes to the text, which would require that it be approved again by the House. As it amends the Constitution, both congressional houses must agree on the exact same text.
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