Can Congress sigh the increase in IOF? Can, but measure is little used in this theme

Brasilia is boiling with the possibility of the Congress to support the Package of the Financial Operations Tax (IOF) announced by the Farm on May 22. Last week, the mayor, Hugo Motta (Republicans-PB), and Senate, David Alcolumbre (Union-AP), met with Minister Fernando Haddad to address the issue and gave the government a period of ten days to present alternatives to the increase in IOF tax.

Although Haddad has anticipated that he will present a solution to tomorrow to close the public accounts without counting the adjustment announced, it is doubtful whether or not Congress may prevent the measure. And also which instrument the legislature could use for it. The report of Infomoney did a research on the subject. See below:

How can Congress prevent the charge?

The sustainment of decrees of the Executive Power is poorly recurrent, but the federal government itself often revokes decrees when there is a process of a Legislative Decree (PDL) project. The PDL is a legislative proposition that regulates matters of exclusive competence of the Legislative Power and is provided for in the regiments of the Chamber and the Senate.

There are no records of sustaining decree that increases tax rate – a tax matter – for this instrument. The increase in IOF tax rates is the responsibility of the Executive Power and, as a rule, would not be subjected to PDL sustainment. However, according to experts heard by the report, if the decree changing tax rates presents a deviation of purpose – such as the alleged tax use of the tax, detached from its function of regulating the financial, credit and capital market – may be questioned via PDL.

The analysis, in this case, involves the definition of the purpose of the IOF and the limits of the executive’s regulatory power.

The PDL is used, for example, to approve international treaties that lead to charges to the National Heritage, to authorize the State of Defense or the federal intervention, as well as the executive acts that exorb the regulatory power or exceed the limits of legislative delegation.

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Because it does not depend on sanction or presidential veto, its process is limited to the National Congress and concludes with the promulgation of the House and Senate tables.

Also, to stop an act of the Executive Power, the PDL needs to be approved in the House and Senate.