Brazil receives a lot of influence from the United States. Positive and negative. Why not focus on the positive influence of good faith? North American culture is focused on the assumption of good faith. Until proven otherwise, everyone acts in good faith and upholds this assumption in all personal and professional interactions. It changes everything.
During the periods I lived in the US (1996/1997 in Boston and 2007/2008 in Chicago), I was fascinated by the returns that the society collects when good faith prevails. I incorporated that positive influence into my life. And, at this time of much discussion about tax reform, I propose this exercise in good faith in this environment of distrust and polarized fights and disputes, which does not help the number one purpose of the reform: to put Brazil on the same level as developed countries.
At this moment, Bernardo Appy is the person that was chosen to lead the implementation of the tax reform. He has all the credentials to implement a comprehensive reform of consumption taxation, with the support of the finance secretaries of all Brazilian states and municipalities. Discussions with scholars on the subject within the CCiF (the Brazilian Tax Citizenship Centre) have taken place during several years. This project is much bigger than Bernardo. He knows it. And the people around this project believe, in good faith, that the implementation of a broad tax reform, with a single VAT or two, will be essential for Brazil.
In constant conversations about the reform, I notice an enormous anxiety surrounding the new government’s proposal. The answer has already been given and is in the fine print of the various interviews given by Bernardo Appy or people around him: it will be the implementation of PECs 110/2019, by the Federal Senate, and/or 45/2019, by the Chamber of Deputies. The discussion goes beyond the technical issues. It is a game of political “chess”. There are many negotiations involving deputies and senators, who answer for their states.
The strategy of “paving” the way in the Senate and in the Chamber before officially publishing the text of what will be the tax reform proposed by the current government seems to me to be the right one. It consolidates the alignment to put the PEC or PECs to the vote. Which will it be? It doesn’t matter. The important thing is that one or both of them combined have the essence of what the group of CCiF scholars brought for senators and deputies to convert into both PECs.
A final and very relevant point in this process is the fact that discussions on changes in income tax, which should include taxation on dividends, closed-end funds and structures abroad (specifically, headquartered in tax havens and privileged regimes), will remain for the next year, with effect as of 2025.
Good faith must always come first. The fruits of this logic are more profitable in all aspects. Regardless of political party position or preference, the tax reform, as it currently stands, deserves our vote of confidence.