Tax Reform and the Federal Pact: un Analysis of the Potential Redistributive Impacts of Constitutional Amendment No. 132/2023

Abstract

The objective of this article is to investigate whether the tax reform promoted by Constitutional Amendment No. 132/2023, specifically in the aspect where it promotes the unification of taxes, respects the federal pact. To this end, the study discusses the autonomy of federal entities from the perspective of the protection conferred upon them by the constitutional entrenchment clauses; it presents a summary of the main changes brought about by the reform, with proper contextualization of the current national tax system. It then addresses criticisms and concerns regarding Constitutional Amendment No. 132/2023, including reflections on the loss of autonomy of federal entities and the redistribution of revenue among them. As a counterpoint, the study argues that the reform may result in greater efficiency and tax justice. Based on simulations carried out using 2022 data by Ipea researchers, significantly positive impacts are identified, such as the substantial reduction of regional disparities and a marked improvement in the distribution of public resources among federal entities. The simulations suggest that revenue redistribution will primarily benefit less developed regions, promoting greater fiscal equity. It concludes that Constitutional Amendment No. 132/2023 does not violate the federal pact but rather redefines the autonomy of entities within a context of greater tax justice, potentially contributing to balanced and sustainable economic development in Brazil.