Government is racing against time to approve projects in Congress; see priorities

As the end of the legislative year approaches, the Luiz Inácio Lula da Silva government is trying to reorganize coordination in Congress and approve a package of measures that combines fiscal impact and popular appeal. After significant defeats — such as the loss of validity of the provisional measure that replaced the increase in the Tax on Financial Operations (IOF) — Planalto is betting on expanding the Income Tax exemption, increasing the taxation of online betting and consolidating social programs to end 2025 with a positive political balance.

The immediate focus is on the project that increases the income tax exemption range to R$5,000, Lula’s campaign promise and the main showcase for the economic area for the beginning of 2026. The text, approved unanimously in the Chamber, is being reported by Renan Calheiros (MDB-AL) in the Senate, who is studying adjustments to points on profits and dividends. The government tries to avoid changes that could return the proposal to the Chamber and delay sanction.

The government leader in the Chamber, José Guimarães (PT-CE), states that the coordination has been resumed after the setbacks of recent weeks.

“We are adjusting the basis and recomposing dialogue. The government will end the year voting a lot”, he said.

For the PT leader in the Senate, Rogério Carvalho (PT-SE), the government started to take new measures that should help strengthen Congress.

“The reorganization of positions between central parties should help strengthen the base,” said Carvalho.

Since the defeat of the alternative MP to the IOF, the government began to “fine-tune” the nominations for positions made by center parties.

In the Mixed Budget Committee, Planalto faces resistance to block the device included by rapporteur Gervásio Maia (PSB-PB) that requires the payment of parliamentary amendments by June 2026, three months before the election.

Planalto considers the article a setback as it hampers budget execution and reduces the margin for political negotiation. Centrão argues that the calendar gives mayors predictability and prevents resource retention.

The economic team is trying to include in the LDO references to IR exemption compensation measures and reorganize the fiscal schedule after the setback with the Financial Operations Tax (IOF) MP. With the loss of R$46 billion in revenue expected by 2026, the Ministry of Finance is working to slice up the proposals and reduce resistance in Congress.

In addition to the new bets project, the package provides for actions on limiting tax compensations, increasing the Social Contribution on Net Profit (CSLL) for fintechs and the persistent debtor law, which toughens the fight against recurrent tax evasion.

According to PT leader Lindbergh Farias (RJ), the government should soon send, as a matter of urgency, a project to deal with fintechs and bets, in an attempt to recover revenue after the setback with the IOF MP. Despite the government’s enthusiasm, House leaders say that the budget should not be released next week.

The government gave a show of strength on Wednesday by managing to approve the MP that deals with reducing tariff impacts on electricity bills. Published after the defeat over the offshore wind farm framework, the MP creates a ceiling for subsidies in the electricity sector and was reported by senator Eduardo Braga (MDB-AM).

“This measure is essential to provide predictability to the sector and avoid further increases in electricity bills,” he said.

The text would expire on November 7 and is considered crucial to prevent previous Congressional decisions from putting pressure on tariffs again.

Other shorter-term measures are also on the priority list. The MP that creates the Gás do Povo program, intended to benefit 15.5 million families, and the one that deals with the restructuring of Funasa, a body linked to the Ministry of Health, are valid until December and are seen as a thermometer of the base’s ability to articulate.

Environmental disputes and indications in the STF

While trying to stabilize the economic agenda, Planalto is working to maintain Lula’s 63 vetoes of the Environmental Licensing Law, approved by Congress in July. The opposition, led by Tereza Cristina (PP-MS) and the ruralist bench, is pressing for the overturn of the vetoes that restrict the self-licensing of works and the exemption from consultations with indigenous and quilombola peoples. The government fears that a defeat on the eve of COP 30, in Belém, will generate international wear and tear.

In the institutional field, Lula is expected to announce in the coming weeks the appointment of Luís Roberto Barroso’s replacement to the Federal Supreme Court (STF). The favorite continues to be the Union’s attorney general, Jorge Messias, but the president intends to talk to Rodrigo Pacheco (PSD-MG) before formalizing the choice. The gesture seeks to neutralize resistance in the Senate and prevent the issue from becoming another test of strength between Planalto and Congress.

The security crisis in Rio de Janeiro put the issue back on the legislative agenda and gave new impetus to the Public Security PEC, reported by Mendonça Filho (União-PE), in addition to the anti-faction package, sent to the Chamber at the end of last week.

“We are dealing with a PEC that requires an in-depth discussion. It is not what changes the security status quo in Rio, but it makes the country discuss responsibilities”, said the rapporteur.

The text, inspired by a proposal by Minister Ricardo Lewandowski, should gain a more decentralized version, expanding the autonomy of the states and including the Federal Revenue Service as a support force in the fight against organized crime. The vote is expected to take place in December.

On the fiscal front, the government is trying to approve the project that doubles the rate for online betting, from 12% to 24%, and seeks to present the proposal as an example of “tax justice”. The articulation is led by parliamentarians from the base and has the direct support of Haddad.

The strategy is to combine fundraising with political narrative: charging more to high-profit companies and preserving lower-income sectors.

The president of the Chamber, Hugo Motta (Republicanos-PB), has reinforced the speech that the Legislature does its part.

“We approved more than 40 proposals on public safety and will continue to prioritize the issue,” he stated.

In addition to economic and security issues, Planalto wants to consolidate the Pé-de-Meia program, which guarantees savings to high school students, as a social hallmark of management. The proposal became part of the constitutional floor of Education and is treated by the government as a symbol of continuity of redistributive policies.