Source: Jornal do Commercio Brasil - RJ - 03/08/2009

The departure of economist Bernard Appy from the Ministry of Finance, announced last week, is another sign of the impossibility of approving tax reform until the end of President Luiz Inácio Lula da Silva's term in 2010. The government forwarded it to Congress at the beginning last year, the reform proposes simplifications to the complex Brazilian tax regime and is, according to the government, an important measure to lower the productive investment in the country.

In the position of Extraordinary Secretary for Economic-Fiscal Reforms, Appy's main function was to act for the approval of the reform, which faces resistance from several segments and did not even get the support of the government's allied base.

“Appy's departure will certainly not be the cause of the reform's failure. The chances of approval were already very low, but his departure reinforces this perception ”, said economist João Pedro Ribeiro, from Tendencias Consultoria. "A reform like this is very complex and involves political costs that the government has not been willing to assume, which is a pity."

Appy claimed personal issues to leave the ministry, where he served in different departments since the beginning of the Lula government in 2003.

He will officially leave the Extraordinary Secretariat for Economic and Fiscal Reforms (Seref) in the second week of August, when he will leave everything ready for André Paiva, currently assistant secretary, to replace him in charge of the secretariat.

The secretary's resignation is yet another pineapple to be resolved by the Minister of Finance, Guido Mantega, who is still looking for a name that does not find resistance to announce in charge of the IRS - since he returned from vacation on Monday, Mantega has avoided questions about the supervisory body.

The most likely name in the succession of the secretary and already approved by Bernard Appy is the assistant secretary, André Paiva. The employee is one of those who traveled the most in the country at the service of the ministry, in the customary exhibitions that the government makes of tax reform, the main demand of the secretariat in the last two years. "In the succession line of the secretariat, which is minuscule, he (André) is the most likely to replace me, and has total conditions of this, because he understands, even more than I do, of tax reform", said Appy.

Another possibility for the secretary's succession is the choice of Seref's general coordinator, Ângelo Duarte. "However," said a source from the Ministry of Finance, "it is more natural for André (to succeed the secretary), not least because he is the second (name) in charge of Seref," he said.

Neither André Paiva nor Ângelo Duarte were in Brasília during the Friday. The first had meetings by the ministry in Rio Grande do Sul, and the second was on vacation. Both are due to return to work next Monday, when they start to work without the secretary, who should not return to Brasília until next Wednesday.

The tax reform was approved by a special Chamber commission at the end of last year, but there is no agreement yet for a plenary vote. After approval by the two Houses of Congress, by three-fifths of the parliamentarians, the proposed changes would still need to be regulated, which would require a series of bills.

"Unfortunately, once again the tax reform is not going to happen," said the director of the Legal Department of Fiesp, Helcio Honda, adding that Appy "threw in the towel" when he left the government. "We now hope that in the next government we will have a deeper discussion about the Brazilian tax system."