Starting the new year Brazilians will have one less tax to pay. Concluding a seven-hour heated debate in the Brazilian senate, which went on up to the wee hours of this Thursday, December 13, the opposition defeated a Lula administration proposal to keep charging until 2011 a tax on checks and other financial transactions.
The check tax is known by the acronym of CPMF (Contribuição Provisória sobre Movimentação Financeira – Temporary Contribution on Financial Transactions).
All the government's maneuvers were not enough to get the three fifths majority the administration needed to keep the tax, which was created in 1993 to be a one-year stopgap measure to fund health programs.
The check tax was born as a 0.20% levy on financial transactions and four years later had that rate raised to 0.38%. The tribute was bringing about 38 billion Brazilian reais (US$ 21.54 billion) every year to the federal government's coffers.
Only about half of this money was being used by the Health Ministry. Social Security and poverty programs were getting part of the cash. This was Lula's worst defeat in Congress in the five years he is in power.
The proposal was rejected by 34 opposing votes. The government needed a minimum of 49 votes to guarantee this constitutional amendment, but received only 45 favorable votes.
Talking for the oppositions, Rodrigo Maia, the Rio de Janeiro representative who is the Democratas leader in the House, told reporters: "Brazil needed this. The government wasn't able to understand that the country is changing."
At the last minute the government tried to gain some votes even promising to use all the money collected for health programs. To no avail.
Senator Romero Jucá from Roraima, who is the government's leader in the senate proposed that the CPMF lasted only one more year, but his proposal was also rejected. In a last failed maneuver Jucá tried to postpone the final vote on the senate floor for another day.
The leader of the DEM party in the senate, José Agripino, from Rio Grande do Norte state, supported the end of the CPMF as a way to reduce the tax burden: "If the government says that without the CPMF the health sector will collapse it's because it intends to use the budget's surplus to fund public TV, to create offices and ministries, to promote an irresponsible lavishness by those who don't know how to rule."