Government triggers STF to reverse annulment of the IOF decree, confirms AGU
The federal government filed a Federal Supreme Court (1) on Tuesday (1) a declaratory action of constitutionality to try to restore the effects of the presidential decree that increased the tax operations tax rates (IOF). The measure had been suspended by a legislative decree approved by the National Congress last Wednesday (25).
The action was presented by the Attorney General of the Union (AGU) at the request of President Luiz Inacio Lula da Silva (PT), and represents an attempt by the Plateau to resume control over a measure considered relevant to short-term economic policy.
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“Congress violated separation of powers”
In announcing the protocol of the action, the Minister of AGU, Jorge Messias, said that the decision of the legislature represents an improper interference in the prerogatives of the chief executive. “This measure adopted by Congress violated the principle of separation of powers,” said the minister.
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According to Messiah, the presidential decree that readjusted the IOF on credit, exchange and insurance operations was in full compliance with the Constitution, respecting the rules applicable to tax regulation.
The minister explained that the decision to trigger the Supreme Court was preceded by a technical-legal study requested by Lula last week.
“We were able, from data, to carry out a wide analysis of the processing of the presidential decree and the legislative decree that culminated with the suspension of the effects of the measure,” said Messias.
AGU has identified three main grounds to support the action:
- The sustainment of the decree represents an impediment to the normative action of the president, with direct impact on economic policy.
- The measure of Congress configures a violation of the division between powers, by annulling a decree that has a legal and constitutional foundation.
- The suspension of a tax in force in force since May has generated legal uncertainties in the market, with potential damage to economic agents.
Dangerous precedent
The Attorney General stressed that, according to the jurisprudence of the Supreme Court, Congress can only use article 49 of the Constitution to support acts of the executive on an exceptional basis, and only when there is evident unconstitutionality-which, according to the government, does not apply to the case of IOF.
“The president’s decree is constitutional and could not have been the subject of a Legislative Decree (PDL) project,” said Messiah, noting that the objective is now to preserve the proceedings and regulatory authority of the Chief Executive.
The revocation of the decrees by Congress caused concern in the economic team. The measure directly reached exchange operations and abroad purchases with credit cards, whose tax rate had been raised to 3.5%. With the annulment, the previous rates are valid again, compromising an estimated collection of R $ 10 billion in 2025.
The movement also intensified the political climate between the Plateau and the Legislature. The ruling base was surprised by the inclusion of the PDL vote on the agenda and suffered a significant defeat in the plenary.
