Parliamentarians were upset with the federal government’s announcement, which mixed spending cut measures with changes to Income Tax
National Congress leaders expressed support for the fiscal adjustment measures presented by the federal government, but highlighted that the reform of the Income Tax table, including increasing the exemption range to R$5,000, will not be prioritized in 2024. The president of Chamber of Deputies, Arthur Lira (PP-AL), stated on a social network that deputies will act with “effort, speed and good will” to approve the proposed fiscal control measures, although he tries to speak in “improve the text”. He reinforced his commitment to the new fiscal framework and warned that inflation and the rise in the dollar especially affect the poorest.
However, the president of the Chamber indicated that any initiative that involves a loss of revenue, such as the IR reform, will only be discussed next year, after detailed analyzes of impact and financing. “Any other government initiative that involves foregoing revenue will only be addressed next year, and after a careful and, above all, realistic analysis of its financing sources and effective impact on public accounts. One thing at a time. Fiscal responsibility is non-negotiable”, said the parliamentarian.
The president of the Senate, Rodrigo Pacheco (PSD-MG), endorsed the position. In a note, Pacheco stated that the debate on IR exemption will depend on the country’s economic growth and fiscal conditions. “Although desired, this is not an agenda for now”, he emphasized. The package of measures announced by the Minister of Finance, Fernando Haddad, includes changes in the calculation of the minimum wage, a review of the salary bonus, limitations on the growth of parliamentary amendments and changes to military pensions.
Most of the proposals will be sent to Congress through a Proposed Amendment to the Constitution (PEC) and a Complementary Law Project (PLP). The government hopes that these measures will be approved by the end of 2024, before the December parliamentary recess, so that they can serve as a basis for the 2025 Budget. The announcement of the measures generated criticism from the opposition and even government allies. The inclusion of the IR reform in the package was seen as inadequate, increasing noise in the financial market and contributing to the rise in the dollar and the fall in the Ibovespa index.
Haddad attributed the “noise” to the confusion surrounding the proposed change in Income Tax, highlighting that this debate requires greater depth and public consultation, which should occur in 2025. The decision to postpone the IR reform was reaffirmed by Pacheco, who classified the fiscal package as a “starting point” for strengthening public accounts. The government remains optimistic about the approval of spending cutting measures.
*Report produced with the help of AI
