The proposal will have a new analysis by the Upper House after being approved with 53 votes in favor, 21 against and no abstentions
The Senate approved this Thursday (Dec 19, 2024) the basic text of the PEC (Proposed Amendment to the Constitution) the fiscal package and the cut in public spending. The text deals with super salaries, DRU (decoupling of revenue from the Union), salary bonuses and basic education expenses.
The proposal passed with 53 favorable votes, 21 opposites e none abstention. It still needs to undergo a new analysis in the House before it can be enacted. Only 3 parties voted against: PL, Republicans and Novo.
Prepared by the Ministry of Finance, headed by the minister Fernando Haddad, as part of the package whose expectation is to save R$71.9 billion in 2 years, the PEC was dehydrated before reaching the Senate.
The Lower House the government’s attempt to (PT) to limit the . Therefore, the pressure exerted by groups linked to the Judiciary prevailed.
In practice, the proposal constitutionalizes “hangings” (extra expenses on aid such as food, housing and clothing) as a circumvention of the public sector salary cap (R$ 44,008.52), based on the remuneration of STF (Supreme Federal Court) ministers. .
Possible regulation on the subject remains in the future. Until a specific law is created to define which “perks” can be paid to public employees, the benefits will not be counted in the salary cap.
In the original project, the government proposed to address the issue through a complementary law, but the rapporteur in the Chamber, (União-CE), determined that it will be by ordinary law.
In the Senate, a against super salaries of public servants. The text was by the Chamber in 2021 and has been in the CCJ (Constitution and Justice Commission) of the Upper House since September 17, 2023.
CHANGES IN FUNDEB
The Senate also made contributions to the government’s original proposal regarding transfers from Fundeb (Fund for the Maintenance and Development of Basic Education and Valorization of Education Professionals), which finances public education networks from pre-school to high school.
The government wanted up to 20% of spending to be directed towards full education, but the allocation ended up being limited to up to 10% in 2025. Starting in 2026, at least 4% of the fund must be used to guarantee full-time enrollment
In summary: the PEC reduces the percentage of Fundeb money that would go towards encouraging full-time enrollment. The government’s initial projection was to save R$42.3 billion by 2030. Changes to the PEC should reduce the amount.
The rapporteur of the matter in the Senate, (MDB-PI), deleted the section of the Chamber that determined the use of Fundeb resources for school meals.
TAX DISCLAIMER
The proposal also includes new rules to establish limits and conditions for tax exemptions. To increase or extend tax exemption periods for a sector, the government cannot do so in an unrestricted manner without considering the fiscal impacts and without transparency. The conditions and limits will have to be defined via a complementary bill.
It is also established that the government may reduce or limit these benefits through the preparation and execution of the Budget. The amounts may be adjusted according to the country’s fiscal needs, but the government will have to respect the commitments already made – compensation contracts or tax benefits cannot be changed retroactively.
This flexibility will allow the government limit or reduce certain public spending (mainly with subsidies and benefits) in times of fiscal difficulties or to ensure budget balance.
The government wants to save R$ 12.8 billion by 2030 with this mechanism.
DETAILING OF REVENUES
Until December 31, 2032, 30% of the Union’s revenue may be unlinked from specific expenses. This will allow more flexibility in the use of public money. On the other hand, the government will not be able to create new rules that increase spending and put pressure on public expenditure.
In short, any new linking of revenues to expenses, including those that require a minimum investment of resources (as in the case of education or health), cannot result in an increase in primary expenses greater than the 2.5% limits of the fiscal framework. (2.5% maximum).
The expected savings are R$7.4 billion in 2 years and R$25.6 billion from 2025 to 2030.
SALARY PAYMENT
The PEC changes the PIS/Pasep salary bonus rules to reduce the number of workers who will be entitled to the benefit. From 2025 onwards, workers who received up to 2 minimum wages in 2023 will be entitled to the bonus.
In 2026, the new rule requires that the worker have earned 1.5 minimum wages in the reference year (2 years before payment) to be eligible.
Currently, the value of the benefit is adjusted by the variation in the INPC (National Consumer Price Index) plus the real gain in GDP (Gross Domestic Product) from 2 years before.
From 2026, the allowance will be corrected only by the INPC, which may reduce the number of beneficiaries and the amount to be paid.
