The TCE (State Audit Court) approved this Wednesday (17) the 2025 accounts of the government (Republicans), but with a report that pointed out the existence of a “parallel budget for revenue waivers” and made a series of reservations.
Despite considering that the main constitutional requirements were met, such as personnel expenses and minimum investments in health and education, the court assessed that there were problems in the São Paulo government’s accounts that hinder the measurement of the impacts of the tax exemption policy on society.
Councilor Marco Aurélio Bertaiolli, rapporteur of the process, used the expression “parallel budget” in his vote to refer to the growth in the volume of benefits without transparency in the Tarcísio administration, reinforcing a .
The State Secretary of Finance, Samuel Kinoshita, told Sheet did not share the interpretation of “parallel budget” presented by the court and stated that the management adopted a set of measures to improve the transparency of tax waivers and that they should be reflected in the analysis of next year’s accounts.
The review of tax exemptions is defended by the Tarcísio administration as a way to eliminate unjustified benefits for businesspeople and increase tax collection.
The court states that there was a reduction in the number of benefits in force, from 267 in 2022 to 187 last year, but that tax waiver values are on the rise.
According to Bertaiolli, in 2026, the estimate is R$83 billion, reaching R$88 billion in 2027 and R$93.77 billion in 2028. “These values represent an average annual growth rate of approximately 6.26%, higher than the average revenue growth rate, projected at 5.78% for the same period”, he stated.
The Secretary of Finance assessed, after the vote, that the proportion of tax expenditure in São Paulo follows the variation in state revenue and that, on average, expenditure on benefits is at a level of around 30% of state revenue.
He highlighted that the values cited by the advisor are projections made based on current estimates of tax waivers for the LDO (Budget Guidelines Law).
Another highlight mentioned was the concentration of benefits — 1% of companies with 80% of the amount waived.
An analysis by the agency indicated that there are tax benefits granted to companies that owe taxes: 25 large debtors, which totaled almost R$4 billion in active and payable debts, received around R$12 billion in waivers, according to the TCE.
The advisor stated that the situation occurs in a scenario of lack of transparency, under the government’s argument that it is necessary to preserve the tax secrecy of companies, and demanded that the government publish data on tax benefits granted by CNPJ.
The TCE also pointed out that the government has not created the necessary structures to supervise companies responsible for public services granted or outsourced, which could compromise quality.
“There is an urgent need for the modernization of a State that called on the private sector to form a partnership and is unable to control, regulate or supervise this partnership.”
The court also warned of a scenario of deterioration in public accounts. In 2025, there was a budget deficit (the balance between everything collected and spent) of R$12.2 billion, equivalent to 3.4% of revenue, a result that was supported by a balance of R$30 billion coming from the previous year, part of which was still from the sale of Sabesp.
The report also highlighted pension financing, with a deficit of R$39.2 billion in 2025 (an increase of 9.75% and equivalent to 15% of net current revenue last year), and problems in reimbursing ICMS (return to companies of excess amounts collected under the tax substitution regime).
The sector was at the center of two operations: Ícaro, from the Public Ministry of São Paulo, and Carbono Oculto, conducted by the Federal Revenue, Federal Police and MP-SP (Public Ministry of São Paulo). The investigations revealed chains of businessmen involved in reimbursement fraud, tax evasion and money laundering.
In analyzing last year’s accounts, the TCE found 1,641 companies with reduced registration status (i.e., already closed) that received tax refunds. There were processes released on the same day, with “zero processing time”, and the directing of processes to specific bodies of the State Finance Department without justification.
The TCE’s findings will be sent, by letter, to the authorities investigating the cases, as auxiliary information, given “indications of crimes of corruption, money laundering and infiltration by criminal organizations in the reimbursement system for fuel tax replacement”.
Despite the reservations, the rapporteur and the Public Ministry of Accounts defended the approval of the accounts, respecting constitutional limits.
Samuel Kinoshita stated that, in 2025, the Tarcísio government determined that taxpayers who have tax benefits need to declare the exemptions in their invoices, a change that took effect from April this year. He stated that, with the new methodology, control of tax expenditures and transparency will be greater.
The secretary also highlighted that any tax benefits granted during the government do not compromise the collection targets.
Regarding the budget deficit of R$12.2 billion recorded in 2025, the secretary highlighted that part of the result came from a frustration in revenues observed in the first half of last year, partly a reflection of the impacts of exchange rate variations on São Paulo’s production in that period.
However, according to him, the government adopted measures, such as improvements to collection monitoring instruments, to guarantee revenue, in addition to the renegotiation of debts that should keep the accounts balanced in the coming years.
