Brazil's lower house approves 'historic' tax reform bill
By Maria Carolina Marcello and Gabriel Araujo
BRASILIA (Reuters) -Brazil's lower house of Congress approved on Friday the main text of a tax reform that will restructure the country's complex consumption taxes, a move President Luiz Inacio Lula da Silva touted as a «great victory».
Such a reform — previously attempted by various administrations without success — is a key step in Lula's plan to boost growth.
Lawmakers at the chamber voted in two rounds to approve the reform and are set to conclude voting some amendments later in the day, after which the bill will be sent to the Senate, where it will also be voted on in two rounds.
«It's a historic moment and a great victory,» Lula tweeted after the voting. «Brazil will have its first tax reform of the democratic period… We are working towards a better future for everyone.»
Starting in 2026, the reform plans to over eight years merge five levies currently in place into a value-added tax (VAT) with separate federal and regional rates, which will be defined later by a complementary law.
The approved proposal also shifts the tax basis from where goods are produced to where they are consumed over a 50-year transition period, starting in 2029.
The change, which is expected to benefit Brazil's wealthier and more populous states, is likely to encounter stronger opposition and calls for broader compensation measures in the Senate, where state governors hold greater influence.
Markets reacted positively to the lower house approval, with Brazil's real strengthening more than 1% against the dollar, while benchmark stock index Bovespa jumped 1.4%.
«For a while, many doubted that the reform would be approved,» economists at JPMorgan (NYSE:JPM) said. «Long-term transition means that
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