For the past few weeks, the Brazilian government and Congress have held a tug of war, with each side looking for displays of strength to knock their counterparts off balance. Yesterday, it was the lower house’s time to show its force. In the House’s Constitution and Justice Committee, lawmakers approved a tax reform bill before the government has even had the chance to draft a proposal of its own.
After the pension reform dragged on for weeks in the very same committee, fast-tracking the tax reform—which is the number 2 priority of the government’s economic agenda—is Speaker Rodrigo Maia’s way of showing President Jair Bolsonaro that Congress can move fast, as long as it wants to. With Congress not keen on giving up much ground, government officials have shown discrete signs of support to the reform.
What does the tax reform bill say?
In theory, the bill would make Brazil’s tax system less bureaucratic. It creates a new tax, called the Tax on Goods and Services (IBS). It would be a value-added tax, resulting from the unification of three federal charges—tax on manufactured goods (IPI) and social security contributions PIS and Cofins—the state goods and services tax (ICMS), and municipal services tax (ISS)....
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