Brazil approves a major tax reform that Lula says will ‘facilitate investment’

RIO DE JANEIRO (AP) — Brazil's lower house has approved a major reform of the country's notoriously complex tax system, a major victory for leftist President Luiz Inacio Lula da Silva, who threw his support behind the proposal. Gave.

The long-awaited tax reform aims to simplify a system that is widely considered overly burdensome for both individuals and businesses, and boost economic growth that has languished amid recession and stagnation for the past decade. .

The reform "will facilitate investment," tweeted Lula, who celebrated the approval of the proposal late Friday and thanked Congress.

The constitutional amendment passed easily by more than 3-to-1 margins in both rounds of voting. When the results appeared on giant television screens in Congress, lawmakers reacted with cheers and applause.

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Speaker Arthur Lira tweeted, "After more than 40 years, the country will have a modern, streamlined and efficient tax system that will transform the country's economy." He said it was "not an ideal system, but it can be approved."

Relations between Lula and Congress, dominated by conservative lawmakers, have become strained. Congress overturned this week a veto By Lula so that he can reinstate a law that eliminates the protection of indigenous people's land rights.

And passage of the tax reform led to record allocations of money to lawmakers for projects in their home states, showing that the government is increasingly relying on grants to muster votes to advance its economic agenda.

But adoption of the tax reform is nonetheless a victory for Lula, whose administration has made approval a priority.

It is another recent victory for the president, who has nominated Justice Minister Flavio Dino to the Supreme Court. The Senate approved that option on Wednesday, despite opposition from lawmakers close to former far-right leader Jair Bolsonaro.

The tax reform would merge the five core taxes into two value-added taxes: one federal and the other shared between states and municipalities.

Under the current system, five main taxes on consumption are collected at different levels of government, with 27 federal entities and more than 5,500 municipalities imposing their own, frequently updated levies.

The system creates differences in interpretation, leading to time-consuming lawsuits and requiring companies to heavily staff accounting departments. This reduces the budget for areas such as research and development and hinders foreign investment.

Now the reform will be signed in a joint session of Congress next week.

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