On Tuesday (4), the Chamber of Deputies approved, by a narrow vote, a change in the fiscal framework that frees up R$15.7 billion for the Lula government to invest in social programs and infrastructure. However, the measure still needs to be assessed by the Senate. However, it already opens up space in the budget for the payment of benefits as the Brazil Aid and the Popular Pharmacy program.
What changes in the tax framework
The Chamber of Deputies approved a change that authorizes the government to use the 2023 primary surplus to finance expenses in 2024, a practice that was previously prohibited. The primary surplus, in turn, corresponds to the difference between government revenue and expenditure, before the payment of interest on the public debt.
Arguments for and against change
In favor:
Proponents defend the need for the change, arguing that it would enable the government to invest in priority areas such as health, education and infrastructure. Furthermore, they claim that the measure is temporary and does not pose a risk to the sustainability of public finances.
Against:
The weakening of the fiscal framework and the risk of rising inflation are highlighted as the main dangers of the change by its critics. Furthermore, they claim that the measure constitutes a “jabuti”, that is, a proposal that is foreign to the central theme of the PEC, inserted hastily and without due deliberation.
Next steps
The Senate still needs to consider the change in the fiscal framework. Once approved, the Lula government will have an additional R$15.7 billion available for investments in social programs and infrastructure.
Experts consider the change in the fiscal framework controversial, as it is a measure with the potential to significantly affect the Brazilian economy. In this context, it is crucial to monitor the next steps of the PEC in the Senate, in order to assess the impacts of the measure in a comprehensive and balanced manner.
Photo: Ricardo Stuckert (PR)
