Zanin votes against the payroll tax relief law, but maintains gradual tax re-taxation until 2027

The Supreme Federal Court began its trial this Friday, the 17th, on the validity of the law that extended the payroll tax exemption for 17 economic sectors and small municipalities. The reporting judge, Justice Cristiano Zanin , voted to deem the law unconstitutional, but decided to maintain its effects and not interfere with the new rule that provides for a gradual reinstatement of taxes until 2027.

According to Zanin, the law passed in 2023 by the National Congress violated basic rules of fiscal responsibility, as it was voted on without an estimate of the measure's financial impact. He believes this failure violates the principle of balanced public accounts.

“It is imperative to declare unconstitutionality, preventing similar practices from being adopted in the future, giving constitutional priority to the principle of budgetary sustainability,” wrote the minister in his vote.

Even though he declared the 2023 law unconstitutional, Zanin decided that its effects will not be retroactively annulled, meaning that companies will not have to return amounts related to the period in which the benefit was in effect.

The minister also made it clear that the law approved in 2024 , which establishes the gradual return of the collection of social security contributions between 2025 and 2027, is not part of the action and, therefore, remains in force. “I will not make any analysis of Law 14,973/2024 […] since it is not the subject of this direct action of unconstitutionality”, he stated.

The trial is taking place in the STF's virtual plenary session and will continue until October 24th. So far, only the rapporteur has voted. The decision is being closely monitored by the government, which is seeking to boost revenue collection after Congress rejected tax compensation measures proposed by the Ministry of Finance.