The governor of São Paulo, Tarcísio de Freitas, said that Brazil’s big problem is fiscal and that attention is necessary with the trajectory of public debt.
“In the end, if I spend a lot, I am compromising the next generations,” he said, saying that if a government spends a lot, he will need to issue more debt, which ends up moving the interest rate, or issuing more currency, which moves inflation.
“In the end, we are talking about tax increase when we talk about a government spending more, we are talking about directly attacking productivity, we are talking about not growing. In the end and by hand, that’s it,” summarizes the governor.
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Tarcisio states that a fiscal problem is the binding of revenue to the budget, which “brings a very large tie.” It exemplifies that the Federal Constitution establishes the floor for education of 25%, and 12%health spending. But “since then, what has changed?”
“Population has changed, demography has changed. Couples have fewer and fewer children, you have a decreasing curve of enrollment and have to invent expenses, sometimes to meet the minimum,” he said, adding that, as the population is aging, could make the education floor more flexible to allocate it with health.
Another point would be the deindexation of what is necessary, according to the governor. “You have a very indexed savings. Some expenses that you increase cause a large hole,” he said. The third point, according to the governor, is something that was already done in São Paulo: the review of tax benefits.
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The statements were made in the panel Reflections on Sao Paulo and Brazil, at the Warren Day event, in São Paulo.
