Analysis of the constitutionality and consequences of Complementary Law 194/2022 on brazilian federalism from the perspective of subnational governments

Abstract

The study promotes an analysis of the federative principle and the Union's competence to issue Complementary Laws containing general rules on tax matters for taxes under the competence of subnational entities. The deductive method will be used. The impacts of Complementary Law 194/2022 on the finances of subnational governments and its consequences for the federative pact will be evaluated based on the limits of the Union's action and the observance of constitutional rules and principles. We start from the hypothesis that the changes introduced by this law, which is immediately effective, will adversely affect the collection of ICMS tax revenues and compliance with the planning contained in the Budget Laws currently being executed, worsening the financial situation of subnational governments and contributing to the deconstruction of the federal pact. The Complementary Law defined as essential some goods taxed by the states (revenues shared with municipalities) and demanded from these spheres of government indirectly, automatic reduction of the rates practiced, without time for the due adjustments and without due compensation for the loss of revenues. By means of bibliographic and jurisprudential research, juridical and economic research, it was possible to analyze the legality, the competencies, the observance or violation of constitutional principles, and the financial consequences for the subnational entities. The Union, with the edition of Complementary Law 194/2022, without the participation of the Brazilian States, violated the federative principles and the autonomy of subnational entities, legal certainty, legality and federative competence. The discussion about the Federative Pact gains relevance, as well as the need for the Union to compensate federated entities for losses.