The President of the Republic, Luiz Inácio Lula da Silva, sanctioned the complementary law that creates reinforcements to the fiscal framework, providing for new triggers to freeze spending in the event of a worsening of public accounts. Legislation can also help with the amortization of public debt.
The text makes up the fiscal package proposed by the economic team and approved by Congress and also provided for new rules for contingency and blocking parliamentary amendments. This section, however, was vetoed by Lula at the suggestion of the Ministry of Planning, after parliamentarians relaxed the Executive’s proposal. The law was published in Official Gazette of the Union (DOU) this Tuesday, 31st.
According to the initial text, the government would be authorized to contingency and block parliamentary amendments up to the same proportion applied to other discretionary expenses, limited to 15%. “In this way, parliamentary amendments will have the same treatment as other discretionary expenses of the Executive Branch, adjusting to the operating rules of the fiscal framework”, said the text proposed to Congress.
The economic team had already tried to implement this block in the specific project that created rules for parliamentary amendments, the result of an agreement mediated by the Federal Supreme Court (STF), but was unsuccessful in the Legislature, which only maintained the possibility of contingency.
Therefore, there was a new attempt through the tax package. However, the Chamber changed the text to determine that the blocking and contingency rule would only apply to non-mandatory amendments. “The contingency and blocking of appropriations arising from non-binding parliamentary amendments are authorized, subject to the same proportion applied to other discretionary expenses, limited to 15% (fifteen percent) of the total of said appropriations, with the aim of meeting the provisions set forth in current tax rules”, said the text, now vetoed.
In justifying the veto, suggested by Planning, the Executive states that, by not expressly authorizing the blocking and contingency of mandatory, individual and state bench amendments, “expressly addressed in the Constitution”, the device would be in dissonance with the understanding of the STF . The government cites what was foreseen in the judgment of ADPF 854, according to which “any rules, restrictions or impediments applicable to the discretionary programming of the Executive Branch apply to parliamentary amendments, and vice versa”.
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“Thus, parliamentary amendments would have the same blocking and contingency treatment applicable to any discretionary expenditure of the Executive Branch. Therefore, the precept would violate the constitutional values underlying the aforementioned decision, in particular the principle of organization of powers established in art. 2nd of the Constitution”, he states in the veto arguments.
The treatment of parliamentary amendments is at the center of an imbroglio between the Judiciary, the Legislative and the Executive. On Monday, the 30th, in yet another chapter, minister Flávio Dino, from the STF, denied a request made by the Senate to release the committee amendments and ordered the blocking of transfers, except those that had already been committed by the 23rd. of December.
Dino considered that the same irregularities identified in the Chamber, which led the minister to suspend R$4.2 billion in amendments in that House, occur in the Senate.
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Triggers and debt repayment
The complementary law to the fiscal package sanctioned by Lula this Tuesday also determines that, between 2025 and 2030, the financial surplus of public funds can only be used to pay off the debt. The text approved by Congress and endorsed by the president also maintained the sections that determine that, if a deficit is found in public accounts from 2025 onwards, the granting, expansion or extension of tax incentives or benefits will be prohibited and a real increase in tax benefits will be prohibited until 2030. personnel expenses and charges for each Power and autonomous bodies above 0.6%, except in the case of judicial concession.
The two triggers will also be triggered if, from 2027 onwards, there is a reduction in discretionary expenses compared to the previous year.
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The new law also provides that annualized expenses resulting from any creation or extension of new social security benefits by the Union will have their variation limited to the real growth rule of the fiscal framework.
