MNI EXCLUSIVE: Brazil To Send Tax Reform To Congress Next Week

     BRASILIA (MNI) - Brazil's Economy Minister Paulo Guedes will send his

long-awaited bill to overhaul Brazil's complicated tax system to the National

Congress next week, lawmakers who attended two meetings at the economy ministry

told MNI, adding that it will contain no new levies, in keeping with election

promises by President Jair Bolsonaro.

     The government does however intend to raise new taxes, the congressmen

said, but these will have to wait until future legislation next year. Officials

told MNI earlier in September that the government still planned to push ahead

with a $37-billion-a-year financial transaction tax, despite public denials by

Bolsonaro, who fired the head of the federal revenue service for supporting the

tax.

     Guedes' tax reform, of which details are not available, has been delayed as

officials try to muster support in Congress, which is already discussing two

rival proposals aimed at simplifying the tax code, and by a scandal involving

the government leader in the Senate, Fernando Bezerra, who is suspected of

receiving $ 1.4 billion in bribes between 2011 and 2013, when he was serving as

a minister under former left-wing President Dilma Rousseff.

     The government bill looks set to begin to be considered in November by the

Chamber of Deputies. While the lower house was already due to vote on its own

competing tax reform proposal in the first half of that month, its sponsor,

Aguinaldo Ribeiro of the centrist Progressistas Party, told MNI that he had no

objection to extending the debate to include the government's bill or to

scheduling new public hearings. Ribeiro's legislation would merge five taxes

into one.

     The Senate bill, which would combine seven taxes into two levies, is due

for voting at the Committee stage in the first week of October and in the

plenary the following week.

     "This may be one of the last chances for this generation to approve a

change in the tax burden," said Senator Roberto Rocha, of the right-wing

Brazilian Social Democracy Party, who is coordinating the upper house's bill.

     At some point, the three competing bills will have to merge, said Hildo

Rocha, president of the lower house Special Committee, but he added the chances

for approval of a tax reform later this year are good.

     "We have never had such a good time to pass a tax reform like now. Congress

is highly reformist," he said, although other congressmen were less optimistic

in their comments to MNI.

     Senate President David Alcolumbre and House Speaker Rodrigo Maia, both from

the right-wing Democrats recently met Guedes to agree on voting schedules. Maia

said he would try to accelerate discussion of the tax reform and also bring a

bill to the plenary in the next few weeks to ease the ceiling on public

spending. Alcolumbre pledged to initiate voting on another key piece of

government legislation, its pension reform, after it was approved in the lower

house in two rounds of voting. But the pension vote has still to take place,

after senators, angered by a police search of Bezerra's Senate office, decided

instead to vote on a bill to allow the president to limit criminal

investigations.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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