(Reuters) – The new Finance Minister, Dario Durigan’s nine-month term in an election year, will include a communication adjustment to demonstrate a focus on economic development and should prioritize the negotiation of microeconomic measures in the National Congress, while the ministry postpones thorny tax issues, two government sources told Reuters.
The department decided to “hold” issues that it considers important, but have the potential to generate turbulence in the Legislature and public opinion, including the end of tax exemption for investment securities, the regulation of the Selective Tax that will affect goods harmful to health and the environment and the taxation of cryptoactives, said the authorities on condition of anonymity.
Discussions of measures will be carried out with caution and strategy, according to the sources, in a context in which Congress is experiencing tensions with the scandal involving Banco Master, with an eye on the elections — which historically reduce the pace of work in the Legislature and, at the same time, increase the impetus of parliamentarians to discuss popular measures with fiscal costs.
After failing to approve the end of the tax exemption for securities such as LCI and LCA last year, the Treasury wants to present the measure again, but one of the sources acknowledged that the topic could be left for a possible new term of president Luiz Inácio Lula da Silva from 2027.
The economic team considers that the benefit distorts the investment market, with papers such as letters of credit and certificates of receivables competing at an advantage with public bonds.
“It remains on the radar, it is necessary to evaluate these issues because they generate regulatory distortions… It is necessary to proceed with caution because emotions are running high in Brasília”, he stated.
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In the case of the Selective Tax, approved in the tax reform and which will come into effect from January to replace the Tax on Industrialized Products (IPI), the government needs to define rates and which products will be affected.
According to one of the sources, the topic will be addressed in a provisional measure, but the edition will not be made at this time and the objective is to discuss and vote on the merits of the text only after the presidential elections in October.
“The concern is not about the impact it will or will not have on the elections, it is how to not burn the cartridge in Congress. If we now present a discussion on Selective Tax and there is a big repercussion, with the right wing spreading fake news, suddenly we could not be able to vote this year”, he argued.
On another front, the taxation of crypto assets should also not be published at this time, according to the sources, after the Central Bank equated these movements to foreign exchange operations and the Treasury prepared a public consultation that would be a first step towards implementing the charge.
Durigan’s legislative agenda will include microeconomic issues, such as the project already underway with rules for regulators to act on financial institutions in crisis. The text could move forward, according to one of the sources, after the government removed the section that provided for help from the National Treasury to banks, a point that generated friction in the face of the problems involving Banco Master and Banco de Brasília (BRB).
The agenda also includes the economic regulation of “big techs”, and the reissue of the program to attract investments in data centers, which will depend on an exception in tax rules. One of the authorities also stated that the folder evaluates initiatives in the area of credit.
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The Treasury also wants to stimulate the debate on the end of super salaries in the public service, with one of the sources arguing that a restricted list of income that can be paid outside the public service remuneration limit be created, in addition to a maximum percentage of the amount that could be received above the ceiling.
Durigan, who was executive secretary of Finance, took office as minister this Friday, after Fernando Haddad left the position to run for governor of São Paulo in the elections. A meeting with the department’s secretaries is scheduled for Monday to align the plans.
COMMUNICATION
With the departure of Haddad, a constant target of criticism from opponents due to tax increase initiatives, with right-wing politicians spreading the nickname “Taxad” on social media, Durigan must seek a communication adjustment in the department amid the electoral debates, the sources said.
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One of them highlighted that President Lula asked Durigan to be the “new face of the economy”, while maintaining the defense of fiscal responsibility and social justice.
According to her, the ministry will prioritize the issue of economic development and signal paths to a “prosperous future”. The strategy foresees an emphasis on debates on improving the business environment, innovation, efficiency and productivity gains, topics dear to the financial market and the right, whilst maintaining the government’s “progressive commitment”, he said.
Lula is expected to seek re-election this year, competing for center and right-wing votes with senator Flávio Bolsonaro (PL-RJ), son of former president Jair Bolsonaro, who is ineligible and is serving a sentence in a closed regime after being convicted in the STF for an attempted coup.
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According to one of the sources, the development agenda was dealt with in a fragmented manner across thematic ministries in the three years of government and the Treasury must promote, from now on, coordination so that there is a consolidated government plan in this area.
