THE IMPACT OF TAX REFORM ON BRAZILIAN FISCAL FEDERALISM

Abstract

This work analytically examines the proposed tax reform contained in Constitutional Amendment 132/2023 and its influence on fiscal federalism in Brazil. This amendment introduced the implementation of a Value Added Tax (VAT) model, similar to the CBS and IBS, two taxes with distinct jurisdictions but based on the same matrix, created to rationalize Brazil's complex tax system. The study explores the principles of the federal pact and discusses how the reform can reshape the context of what we understand as the autonomy and financial sustainability of states and municipalities. The methodology used combines a descriptive approach with documentary research and bibliographic review. The results indicate that the analyzed amendment offers potential benefits in terms of economic efficiency and fiscal simplification, with the adoption of financial compensation mechanisms and the active participation of federative entities in the elaboration and implementation of the reform being crucial. It is concluded that Constitutional Amendment 132/2023 can contribute to a fairer and more efficient tax system, without violating the Brazilian federal pact, but with the necessary reservations that deserve to be addressed, which build and substantiate this work.