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     SAO PAULO(MNI) - The Brazilian government's hopes of putting a major reform
allowing it to slash its civil service wage bill to a parliamentary vote before
July are likely to be disappointed, three leaders of parties in the lower house
of Congress told MNI, saying a debate on the bill may not come before the second
half of the year as legislators prioritise an overhaul of the tax system.
     "The government does not seem to know what it wants. Parliament has taken
over this vacuum and is pursuing its own agenda," said Efraim Filho, lower house
leader of the right wing Democrats.
     While the government of President Jair Bolsonaro has provided no estimate
of savings from the reform, it hopes it will allow it to avoid filling most of
149,000 civil service jobs otherwise expected to become vacant by 2024 as
existing employees retire. Seeking to reduce its USD25 billion annual pay bill
for its 712,000 civil servants, any new hires would be taken on at
private-sector-level salaries - about 50% lower, according to the World Bank --
and kept on probation for three years before their positions are made permanent.
     But, despite the expressed ambition of Economy Minister Paulo Guedes of
getting the reform approved in the coming months, the government has still to
finish drawing it up. Nor has the government sent Congress its proposal for tax
reform, even though legislators are set to prioritise consideration of three
competing proposals already at different stages of the legislative process, and
which will now be debated by a bicameral committee.
     Two of these tax plans focus on simplifying a confusing mesh of levies,
proposing to merge five or seven separate taxes on consumption into a single
rate. While they have no immediate implications for revenues, these two
proposals, which the government sees positively, are meant to simplify business
for companies in Brazil, hopefully attracting more investment.
     The third proposal, which would cut taxes for the poorest and boost them
for the wealthiest, was presented by leftist parties in opposition to Bolsonaro
and party officials, including two in favour, told MNI it was unlikely to
prosper.
     --CONSTITUTIONAL CHANGE
     With legislators concentrating on taxes, the space for consideration of the
administrative reform will be considerably reduced. Both the administrative and
tax measures would require constitutional changes, requiring at least three
fifths support in each chamber. Filho and Alessandro Molon, of the Brazilian
Socialist Party, said it would be difficult to consider both bills at the same
time. Another lower house party leader, Andre Figueiredo of the leftist
Democratic Labour Party, said it might be possible, but only "with good will."
     Later in the year, municipal elections held from August to October might
also slow down Congress, with many parliamentarians taking time to campaign for
candidates.
     Irritated by the limited prospect for immediate progress for his
administrative reform, Guedes exchanged accusations with Rodrigo Maia, president
of the lower house Chamber of Deputies, at an event in Sao Paulo on Thursday.
Guedes said he was becoming used to politicians' slow tempo, while Maia pointed
out that Congress cannot process government proposals before the government
draws them up.
--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com
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