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Brazil’s Senate rejects tax measure backed by President

Monday, 09 March 2015   (0 Comments)
Posted by: Author: Jeffrey T. Lewis
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Author: Jeffrey T. Lewis (The Wall Street Journal)

The leader of Brazil’s Senate Tuesday unexpectedly rejected a tax-increase measure sent by President Dilma Rousseff for legislative approval, highlighting the political challenges facing the president as she tries to enact fiscal austerity measures.

Senate President Renan Calheiros said the increase, to one of the taxes paid by Brazilian businesses, wasn’t urgent and should be enacted using the normal legislative process.

Ms. Rousseff had planned to get the measure—a partial reversal of a 2011 tax cut—approved using a constitutional tool intended for use only during urgent circumstances.

Ms. Rousseff responded to the Senate’s move by submitting the increase to Congress in a different kind of bill that has a shorter time limit for passage than a normal bill.

The increase is part of a series of economic measures implemented by the government to try to get its finances under control and boost the economy. Taxes on gasoline and diesel fuel have already risen, and other tax increases are expected.

Mr. Calheiros said he rejected the measure because it is Congress’s job to enact new legislation.

The president "is misrepresenting the very concept of separation of powers, reversing the constitutional roles” of the executive and the legislative branches, he said, adding the measure could just as easily be approved following the usual legislative procedure.

The president’s office wasn’t immediately available to comment.

Ms. Rousseff is facing resistance from her own party and from her partners in Congress over some of her proposed economic proposals. The action by Mr. Calheiros, a member of a party allied with Ms. Rousseff’s Workers Party, shows that the president needs to be very careful in her dealings with legislators, according to analysts.

"The political situation for [Ms. Rousseff] is challenging,” said Flavio Serrano, an economist at BES Investimento, based in São Paulo. By rejecting the provisional measure, "it makes it more difficult to make necessary adjustments” to the economy.”

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