What to expect from the Brazilian Congress in 2020?

. Jan 06, 2020
What to expect from the Brazilian Congress in 2020? The Brazilian Congress building. Photo: Rosalba Matta-Machado/Shutterstock

2019 was a turbulent year in Congress, to say the least. An apparently interminable 12 months came to an end on December 20 with the approval of the 2020 federal budget, sending politicians off on holiday until February. Besides the heated and lengthy debates over the major pension reform approved this year, there was much friction between the congressional heads—Davi Alcolumbre in the Senate and Rodrigo Maia in the House—with President Jair Bolsonaro.

Without a doubt, the biggest vote in 2019 was the overhaul of Brazil’s social security system. Even with relatively little opposition, the government’s interference (or lack of) delayed the process numerous times. If that were not enough, the president’s former party, the Social Liberal Party (PSL), imploded under accusations of corruption and split into two groups: the remaining party members and the Bolsonaristas, who are moving to defect to a new party, entitled the Alliance for Brazil.

In 2020, one of the biggest fights in the lower house will be the election of a new Speaker. Incumbent Rodrigo Maia is no longer eligible for re-election, meaning the race is wide open.

Below, we have summarized some of the most important votes to take place in Congress this year.

</p> <h2>House of Representatives</h2> <h4>Administrative reform</h4> <p>A bill has not yet been submitted, but House Speaker Rodrigo Maia has already stated that the matter will be addressed with in February. The Executive&#8217;s idea is to put an end to the statutory regime, which provides different rules for <a href="">public servants</a> as opposed to regular registered workers.</p> <h4>Imprisonment after a failed appeal</h4> <p>The proposed constitutional amendment allows for imprisonment after an appeals court conviction will be one of the most controversial issues facing the House of Representatives in 2020. In addition to dividing opinion, the way the change is made could affect other areas of law. The proposal amends articles 102 and 105 of the Constitution, stipulating that the sentence will become final after a single failed appeal, and no longer when all appeals routes have been exhausted.</p> <h4>Central Bank independence</h4> <p>Another issue that, according to Rodrigo Maia, will be a priority in the lower house is the proposal to establish the<a href=""> independence of Brazil&#8217;s Central Bank.</a> In addition to being a demand from the OECD, the move is supported by many on the grounds of stimulating economic policy and avoiding political interference at all costs. The bill to be voted on was submitted by the current House Speaker back in 2003. The proposal established a four-year term for Central Bank presidents, with the right to one re-election, and six-year terms for the bank&#8217;s board members.</p> <p>They would only be able to be dismissed on the grounds of clear inefficiency in management or illness. The power to nominate them would remain with the President, requiring confirmation from the Senate.</p> <h4>Securitization of debt</h4> <p>A supplementary bill pending in the House would allow federal, state and municipal governments to advance credits they have yet to receive. If approved, the administration may create a single-purpose company to sell these rights to companies or investment funds. The guarantee of the sale will be the expectation of future payment by the debtor.</p> <h4>Agribusiness decree</h4> <p>A presidential decree issued by Jair Bolsonaro, which expands the model of financing for agribusiness, still requires approval from Congress. The idea of the change is to strengthen the concession of guarantees for the payment of debts and thus bring more private contributions to agribusiness, in addition to gradually reducing federal government contributions, leaving them for extremely necessary situations.</p> <p>Among the intended changes are alterations to the rules on the appropriation of rural properties, the Rural Property Certificate, the recording of bonds and the granting of economic subsidies to cereal companies. It is also planned to create a Solidarity Guarantee Fund, which will serve as a guarantee to the banking network for the payment of agricultural credit.</p> <hr class="wp-block-separator"/> <h2>Senate</h2> <h4>&#8220;Emergency PEC&#8221;</h4> <p>This proposal for a Constitutional Amendment (PEC) allows governments to cut public servants&#8217; working hours—and salaries—by up to 25 percent, and suspends new hires and promotions during a period stipulated by the administration, be it federal, state or municipal. This maneuver may be requested whenever the current expenses of the given year exceed 95 percent of revenues. The bill also prohibits, as of 2026, the granting of any tax benefits that exceed 2 percent of the GDP.</p> <h4>Reform of the &#8220;Federative Pact&#8221;</h4> <p>Decentralize and decouple. These are the arguments of Economy Minister Paulo Guedes to justife the<a href=""> need to reform Brazil&#8217;s &#8220;federative pact,&#8221;</a> which is the name given to the distribution system of funds between federal, state and municipal governments. Mr. Guedes claims this will be the biggest social program of the Bolsonaro government, as it will allocate almost BRL 450 billion to states and municipalities over 10 years. </p> <p>The proposal also increases flexibility for spending on health and education by aggregating the percentages of compulsory spending. Currently, states are required to allocate at least 12 percent of their revenue to health and 25 percent to education. The percentages for municipalities are 15 percent and 25 percent, respectively. If the PEC is approved, states and municipalities will have 40 percent of their revenue to invest in these areas as they see fit.</p> <h4>Funds PEC</h4> <p>This <a href="">proposal</a> to alter the Constitution establishes a supplementary law for the institution of public funds and obliges Congress to ratify all existing funds by way of specific laws for each one. Congress will have two years to confirm the validity of these funds, if it does not do so, they will be extinguished.</p> <h4>Updating the legal framework of the electricity sector</h4> <p>This proposal changes the commercial model of the electricity sector and the concessions of <a href="">energy generation in Brazil</a>. If approved, the concessions will be put up for auction or public bidding and will last up to 30 years. The bill also allows the federal government to operate the service until an interested party comes along, and guarantees the utility companies the possibility of holding specific auctions to purchase electricity as a means of protecting themselves from volatile prices. The bill has already been approved by the Senate&#8217;s Constitution and Justice Committee and awaits a vote in the Infrastructure Committee.</p> <h4>Firearm ownership and carry licenses</h4> <p>This bill loosens the rules for the <a href="">ownership and carry permits of firearms,</a> but increases the criminal penalties for violations committed concerning this type of weaponry. The proposal guarantees property owners—whether they be rural or urban—the right to own guns at home. The bill also includes provisions for carry licenses for those who shoot firearms for sport, members of the Judiciary, Public Prosecutors, and employees of tax authorities, among others, and those who can prove their profession constitutes a risky activity. All of those who have unregistered firearms would have two years to declare them to the authorities.</p> <h4>Large companies</h4> <p>Already approved in the lower house&#8217;s Constitution and Justice Committee, this proposal amends the financial limits to define what constitutes a &#8220;large company.&#8221;</p> <p>The proposal establishes that large companies are those with total assets of over BRL 440 million or annual gross revenues over BRL 550 million. Currently, these amounts are BRL 240 million and BRL 300 million, respectively.</p> <h4>Imprisonment after a failed appeal</h4> <p>This bill amends the Code of Criminal Procedure to allow those with convictions upheld by an appeals court<a href=""> to begin serving their jail sentences</a>. Unlike the bill reviewed by the House, this text does not amend the Constitution, meaning that the changes, if approved, would not go beyond criminal law. The government&#8217;s chief whip in the Senate, Fernando Bezerra Coelho, stated that the bill won&#8217;t go to a vote until the lower house decides on its own proposal.</p> <hr class="wp-block-separator"/> <h2>Congress</h2> <h4><strong>Tax reform</strong></h4> <p>Before it goes to the lower house, the proposal for <a href="">tax reform</a> will be analyzed by a mixed committee of representatives and senators. Paulo Guedes has stated that the Executive branch will not submit an alternative bill, but will submit its suggestions to the committee for debate. Members of Congress will then have 90 days to analyze all proposals and draft a single bill.</p> <p>The joint committee was a solution thought up by the Senate and House to cool tensions between both chambers. <a href="">Two different proposals</a> are pending, one in the House and another in the Senate. The former foresees the creation of a Value-Added Tax and ensures a deadline of 50 years to compensate states and municipalities with the unification and extinction of taxes. The latter, meanwhile, creates a Goods and Services Tax and offers a compensation deadline of just 15 years.

Brenno Grillo

The Brazilian Report's correspondent in Brasília, Brenno has worked as a journalist since 2012, specializing in coverage related to law and the justice system. He has worked for O Estado de S. Paulo, Portal Brasil, ConJur, and has experience in political campaigns.

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