The heart of tax reform is VAT, without VAT there is no reform, says Haddad

In an interview with CNN this Friday (10), the Minister of Finance, Fernando Haddad, said that he is very confident in the approval of the tax reform in Congress, and that it is “very necessary”. For the minister, the main point of the reform will be the Value Added Tax – IVA. “The heart of this reform is VAT. Without VAT there is no reform”, said the minister.

Haddad explained that the idea now is to present at the end of the working group created by the President of the Chamber of Deputies, Arthur Lira, “the best of the contributions” and submit to the plenary. “And get, I don’t know if a consensus, but something close to it, so that we have enough votes to approve it.”

The minister said he was “very impressed with how the carriage was going”, mainly due to the support of the governors in favor of the reform.

“The seven governors of the South and Southeast demonstrated in favor of the reform. Mayors of big cities were with me, I explained to them. They wanted other projects, which are not bad, but they don’t work now, but they were touched by my arguments and by Bernard Appy, who accompanies me as special secretary for tax reform, ”he said.

Haddad says he hopes that the matter will be voted on in the Chamber from June or July.

ICMS

The minister pointed out that the governors’ support for the tax reform is mainly due to the issue of ICMS. According to him, the Tax on Circulation of Goods and Services would be making the states “ungovernable”.

“No one can stand the ICMS anymore. An unmanageable thing. 1 trillion reais and you don’t have legal security to collect the tax. Not knowing when the Justice will surprise with a decision with what can or cannot, as was the case of Pis/Cofins. When it removed ICMS from the Pis/Cofins base, the Union lost R$ 100 billion overnight.”

This amount, said the minister, is equivalent to the size of this year’s deficit. “We need to bring legal certainty to this country. Either the state’s tax base is reinforced and guarantees stability, or the governor and the president of the Republic will be chasing new taxes to cover the gap.”

The Minister of Finance reinforced that he considers the reform “very necessary” and that “the most interested are the governors”.

“They are in a much more vulnerable legal situation. Second, the Union. Then the mayors of small towns. And even the mayors of big cities have no reason to fear [a reforma].”