In the midst of the crisis experienced by the federal government in relation to the situation of public accounts, the governor of São Paulo, Tarcísio de Freitas (Republicans)took advantage of a ceremony at Palácio dos Bandeirantes, this Wednesday (18), to send a message to his political opponents and the financial market.
According to the Chief Executive, São Paulo is in the “right direction” and can serve as an “example for Brazil” when it comes to fiscal balance.
“We are reviewing benefits, decoupling revenue, abolishing bodies, cutting costs, privatizing. We are in the right direction. We are doing what every manager should do”, stated the governor during the 2024 review to an audience of secretaries, deputies and mayors. “As a practical result of this rearrangement, the 2025 budget is a record: R$33.5 billion in planned investments,” he added.
According to him, it is necessary to take these measures to have fiscal breathing space in the face of a scenario that he classified as “complicated” at “Brazilian level”, with increased debt and more inflation. “How are we going to prepare the State for a slowdown that may come? I have to take care of the bills,” he said.
With Jair Bolsonaro (PL) ineligible, but he has said both publicly and behind the scenes that his objective is to run for reelection to the São Paulo government.
The governor managed to implement part of his agenda this year: he privatized Sabesp and Emae, approved the 5% flexibility in minimum spending on education, which could be transferred to health, held auctions and infrastructure concessions, reformulated regulatory agencies and did not renew around a third of the tax benefits that expired in April.
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The government also began cutting commissioned positions and trust functions approved last year, when it obtained authorization from state deputies to cut 20% of these positions. The reduction began in November by Detran, where the number of commissioners fell from 1,177 to 930, and by the Secretariat of Management and Digital Government, which went from 356 to 297 positions of this type.
“Brazil’s biggest problem is the volume of tax expenditure. Every government should face it, but it is not always easy”, said Tarcísio. The Lula government tried to end the payroll tax exemption, but the veto was overturned by Congress. Furthermore, the tax reform approved by the Chamber of Deputies maintained the benefits of the Manaus Free Trade Zone.
“We decided to put our finger on the wound: in April, a third of the benefits were not extended. Now in December we are going on the same path and another third of the benefits should fall”, said Tarcísio.
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One of the sectors that should be affected, the Federation of Hotels, Restaurants and Bars of the State of São Paulo (Fhoresp) met, on Monday (16), with the Government secretaries, Gilberto Kassab (PSD), and Finance , Samuel Kinoshita, to try to renew the tax incentive originally obtained in 1993. The sector pays 3.4% instead of the standard rate of 12%.
On the other hand, part of the fiscal adjustment measures mentioned by Tarcísio, which are part of the “São Paulo in the Right Direction” plan, have not yet been implemented. The head of the Executive once again promised, as he did throughout the year, to extinguish local authorities and public companies, but he did not give a deadline or detail which bodies are in his sights. There are studies to end metropolitan agencies and restructure foundations, without any concrete proposals so far.
Questioned after the event, the governor said he was still analyzing which bodies would be abolished. He, however, cast doubt on the usefulness of metropolitan development agencies and said that companies that only manage contracts are no longer necessary given the strengthening of regulatory agencies.
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“Do we really need to produce certain things that I can produce on the market at a lower cost? Is it not appropriate to incorporate certain plants into organizations that have provided a more efficient market response, such as Butantan?”, stated Tarcísio.
In addition to the metropolitan agencies, the government is considering abolishing the Foundation for Popular Medicine (Furp) and a public-private partnership to manage the Casa Foundation.
