Controversies in the Tax Reform Proposals


The two tax reform proposals currently being debated in the National Congress, PEC 45/2019 and PEC 110/2019, have controversial points that generate discussions and disagreements among lawmakers, experts, and sectors of society. Some of these points are:

Impact on state and municipal revenue
PEC 45/2019 proposes the decentralization of the collection of the Goods and Services Tax (GST), allowing each state and municipality to define its own tax rate. However, this decentralization also raises concerns about the impact on state and municipal revenues. Some lawmakers and governors argue that the change could harm the finances of poorer states, which have less revenue-raising capacity.

On the other hand, PEC 110/2019 proposes the centralization of GST collection by the federal government, which has drawn criticism from lawmakers and governors who advocate for the autonomy of states and municipalities in setting their tax rates and managing their finances.

Different rates for different sectors
Both proposals envisage the creation of differentiated tax rates for different sectors of the economy, leading to discussions and pressure from interest groups. For example, PEC 110/2019 proposes the creation of a selective tax for products deemed harmful to health and the environment, such as cigarettes, alcoholic beverages, and high-sugar content products. However, there are criticisms regarding the definition of rates and the inclusion or exclusion of certain products.

Discussion about the simplification of the tax system
The two tax reform proposals aim to simplify the Brazilian tax system, reducing complexity and bureaucracy. However, there are discussions about the effectiveness of the proposals in achieving this goal. Some experts argue that the proposals still maintain excessive complexity, with many details and exceptions.

Changes in the tax regime for companies
The tax reform proposals also foresee changes in the tax regime for companies. For example, PEC 45/2019 proposes the abolition of the Simplified National Taxation (Simples Nacional), which is a simplified tax regime for micro and small businesses. This change has garnered criticism from entrepreneurs and lawmakers who advocate for the maintenance of the regime.

In conclusion, the tax reform proposals, PEC 45/2019 and PEC 110/2019, while seeking to simplify and optimize the Brazilian tax system, bring forth a series of contentious issues. Whether it is the decentralization versus centralization of GST collection, the definition of differentiated rates by economic sector, or the change in the tax regime for companies, these points underscore the inherent complexity of the tax reform process. Achieving harmony between the need for a simplified system, tax fairness, and the autonomy of federal entities is a challenge that the National Congress must confront, always paying attention to dialogue with all sectors of society in order to promote an equitable and efficient tax system.


Stay updated on the latest news and bulletins in the tax and corporate sectors.

    By providing my data, I agree to the Privacy Policy.