BRASILIA (Reuters) -The Brazilian Congress voted on Thursday to block President Luiz Inacio Lula da Silva’s veto on a bill focused on extending payroll tax exemptions for 17 labor sectors until 2027, in an expected setback for the government.
During a joint session, senators voted 60 in favor of overturning the veto and 13 against, while in the lower house, the vote was 378 to 78, meaning the bill – that passed months ago – can now be instated.
Lula had argued that the measure would result in revenue losses if no compensation was established, hindering the government’s ambitious goal of eliminating the primary deficit by 2024.
Implemented temporarily in 2012, the tax exemption has been successively extended in the face of pressure from benefiting companies.
In Brazil, companies pay a 20% tax on their payrolls to contribute to social security. Under the bill, the benefiting sectors would continue to be able to replace this burden with rates ranging from 1% to 4.5% on their gross revenue for another four years.
Earlier on Thursday, the government leader in Congress, Senator Randolfe Rodrigues, predicted defeat on the veto and said that an agreement for an alternative measure could not be reached.
(Reporting by Marcela Ayres; Editing by Jonathan Oatis and Isabel Woodford)
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