Brazil’s House of Representatives has scheduled a vote on August 26 on a bill that would give concrete shape to the country’s groundbreaking tax reform, the centerpiece of which was passed by Congress last year.

The bill addresses how the collection of Brazil’s future VAT-like levies will be enforced – and how the money will be distributed among the federal government, states and municipalities. The core text of the bill was passed on August 13, but now Parliament must consider whether to adopt proposed amendments to the bill.

The vote was originally scheduled for August 14, but was postponed amid an institutional war of attrition between Congress and the Supreme Court over budget appropriations.

These grants are a part of the federal budget that deputies have control over – they usually use earmarked funds to finance projects in their constituencies. But these grants have become central to the functioning of Brazilian politics. They are one of the main variables in the country’s political governance model – and increased congressional control over federal funds has shifted the axis of power toward the legislature.

In theory, budget appropriations are a legitimate mechanism of democratic representation that promotes a win-win-win situation: voters get improvements in their constituencies, lawmakers get votes in return, and presidents get support for their legislative agenda.

But in recent years they have exploded – and billions have been pumped into earmarked projects with little oversight over how the money was spent, sparking several corruption investigations. The Supreme Court recently suspended the payment of a particularly opaque type of grant until transparency and traceability criteria are established.

Congress responded by suspending votes on key projects on the government agenda, including tax reform. The deputies are convinced that the Supreme Court acted in the interests of the Lula government by blocking the grants.

On Tuesday, government officials, congressional leaders and Supreme Court justices agreed to lift the ban on certain types of subsidies (see our August 21 Brazil Daily newsletter for more details) – paving the way for tax reform to move forward in Congress.