The quick approval of the tax reform PEC (law project) 45/2019 in the House of Representatives was a national celebration of the Brazilian bourgeois and bureaucratic elites. The mainstream media treated the celebration as the end of a cycle of more than 30 years of debates on the issue. The banks, through Febraban (Brazilian Bank Federation), and the industry, through Fiesp (São Paulo Federation of Industries), celebrated – the latter even paid for a two-page ad in the Folha de São Paulo to pressure for the vote on the text. Agribusiness, always gnashing its teeth, had nothing to complain about. The governor of São Paulo, a rising Bolsonaro leadership, articulated for the approval and applauded the final text.

In the political sphere, Arthur Lira (congressman with a position similar to the US Speaker of the House) has strengthened his position as prime minister of our presidential regime, dictating the agenda of Congress and attracting votes for its approval. Lula’s government, in turn, achieved the mark of having been the administration that finally unlocked a reform that had been stalled for decades. The Bolsonaro opposition, in a theatrical way, voted mostly against – even though 20 congressmen from the PL (Liberal Party) supported it -, even though they agreed with the whole content of the project. They didn’t want to endorse what they said was “the PT’s reform,” ignoring the fact that the text had been in Congress for four years and was the result of right-wing articulations.

This brief summary demonstrates the bourgeois consensuses built around PEC 45. From the point of view of the interests of the workers, these agreements do not stand up to a critical and detailed reading of the situation. In this article we bring elements for a first look, still in a summarized way, about the bourgeois consensuses built around the tax reform and sold to the population as strategic advances.

First, it is necessary to say that a reform that has been under debate for three decades was not voted on. A bill filed in 2019 by congressman Baleia Rossi, national president of the Rightist party MDB (Brazilian Democratic Movement), was voted on, and it suffered changes until the last minute – changes that did not go through any previous debate and were articulated by a close ally of Lira, congressman Aguinaldo Ribeiro, from the PP (Popular Party, another right wing organization). One of them was the extension of tax immunity for religious entities, included at the last minute. That is, not only does this reform maintain the tax exemption for temples, but it also extends and writes into the Constitution this immunity also for organizations associated with religions. While sectors of society demand an end to this tax permissiveness, which in Brazil benefits the great merchants of faith, the Congress, not surprisingly, maintains and expands such privileges.

But PEC 45 is not only bad for what it does, it is also bad for what it fails to do. In a country with a regressive tax system, where those who have less are charged more through excessive taxation on consumption, the tax reform was approved without changing this logic. In the second most unequal country in the world, the super rich will not be asked to contribute more and the Great Wealth Tax (IGF), foreseen in the Constitution since 1988, was not included in the scope of the tax reform. PEC 45 keeps Brazil as the only country in the world, alongside Estonia, not to tax profits distributed to shareholders in the form of dividends. In a country with a maximum tax rate of 8% on inheritances, the tax reform has not advanced in the sense of progressively increasing this percentage, when even in the United States this rate can reach 40%.

We can conclude, therefore, that PEC 45 changes only the form, not the essence of our tax system. This is not to deny the positive aspects of the measure. Simplifying the complex tax system that we have is a positive thing, because it gives more rationality to the collections. But it is a rationalization from the point of view of bourgeois interests, without changing the logic of the system. Other positive points, such as the exoneration of the basic food basket, in practice are left for later, with the need for regulation by complementary law. The collection of IPVA (property tax) on jets and yachts, a basic element of tax justice, is nothing more than a possibility, an authorization of the PEC that will be up to the states to implement – that is, it will depend on the bourgeois-dominated State Assemblies.

Within this discussion, it has been posited in sectors of the left that between tax simplification and doing nothing until the whole system changes, one would have to vote for this reform in order to move towards more structural changes. This argument ignores the fact that, with the approval of PEC 45, the entire political and economic system is already uniting to say that Brazil has finally unlocked tax reform, consolidating the idea that there is nothing more to be done. As if the country’s tax problem was to extinguish five taxes to create two. In this propaganda task, the big media is a fundamental ally, with its superficial coverage on the theme – and being itself benefited by the 50% tax discount for the national journalistic and audiovisual sector

In this scenario, to present an independent position in Congress, one that does not embark on the national celebration of the elites nor on the Bolsonarist theater, abstention was the most appropriate position, adopted by Fernanda Melchionna, Sâmia Bomfim (MES representatives) and Glauber Braga, from PSOL. Far from representing an absence of a position, in this case abstention was the most positioned vote possible. It was a vote of alert and of denunciation, in the sense of expressing that this reform only changes the form, not the structure. It was a call to mobilize for the taxation of large fortunes and income. A demonstration that political independence to defend workers’ rights does not fit in the Febraban and Fiesp feast, nor embark on the extreme right wing’s game – depending on whom the reform would be even worse and more permissive to agribusiness, mining, and the financial system. Most of the PSOL deputies voted in favor. Unfortunately they were part of this unity between the Executive, the Congress and the big bourgeoisie. But the worst thing was not the vote, it was to affirm that the working class won a great victory.

Banks and big industries, not without reason, celebrated the approval of the reform. More than that, they actively worked to make the vote happen, because the text establishes a differentiated taxation regime for the financial system. The new taxes (CBS and IBS) do not apply to banks. But it is not yet known what this differentiated system is for banks, after all it will need to be created by complementary law, at which time the Febraban lobby will play hardball so that the taxation of banks – which today pay taxes such as PIS/COFINS, ISS, and IOF, even if at very low percentages – will remain as it is or even be further reduced.

The extinction of the IPI (Tax on Industrialized Products), on the other hand, served the interests of Fiesp. While for the agribusiness, the exoneration of exports is a victory, because it institutionalizes in the Constitution the reality of the Kandir Law, whose tragedy states such as Rio Grande do Sul know first hand. The PEC 45 expressly vetoes the taxation of goods and services destined for export, selling the false idea of valorization of the national production while, in fact, reinforcing the character of a Brazil that exports raw materials and agricultural commodities. Mining has also benefited from this change, a sector, just like agribusiness, dominated by international corporations that operate in a predatory way in the country.

Moreover, agribusiness still maintained, with the approval of the reform, the concrete perspective of obtaining a reduction of up to 50% of the taxes levied on pesticides. Article 8 of the bill kept this benefit to “agricultural inputs”, in a generic way, without detailing what these items would be. It will be possible, thus, to build a complementary law determining that the poison they put in our food is an “agricultural input”.