Dispute in Congress should not impact fiscal rule, evaluates Haddad

The processing of the new fiscal framework in the National Congress should not be impacted by the current dispute between the Chamber of Deputies and the Federal Senate, according to the Minister of Finance, Fernando Haddad. According to him, the dispute revolves around the rite of approval of the provisional measures, and the new fiscal anchor will be presented as a supplementary bill.

“The problem that is happening there concerns the provisional measures. This here (the fiscal framework) we are talking about a complementary law; tax reform, constitutional amendment. All of that is out of the game. Another thing, we can send laws with a request for constitutional urgency, that there is also no controversy between the Chamber and the Senate”, he said at a press conference this Friday afternoon (31), in the capital of São Paulo.

The minister also added that the “controversy” in Congress occurs in relation to the provisional measures dated from January 2023. law, and constitutional amendment, is also resolved.”

Haddad, who met today with industry and financial industry leaders, stated that the sectors’ reception of the new framework has been positive. He returned to say that the presentation of the new fiscal rules is the beginning of the recovery of public accounts.

“I think the receptivity was very good compared to what was presented yesterday. There are some details that will have to be considered over time, which will be presented. Because the so-called framework, the fiscal rule, is just the beginning of a job of recovering public accounts to broaden our planning and investment horizon”, he said.

no new taxes

The Minister of Finance reinforced that there will be no creation of new taxes or increase in rates of current taxes. According to him, the government intends to increase revenue by making sectors that currently enjoy tax exemptions and benefits start paying taxes.

“We are talking about what, in Brasilia, is called jabuti, those laws that were passed, many times, in the dead of night, which opened space for (tax) abuses that, many times, were amplified by administrative or judicial decisions, and that distort the competitiveness of the Brazilian economy”, he pointed out.

“It’s what we call the patrimonialism of the Brazilian economy, which is that economy of favor, of the little way, someone always comes in there giving a little way, for their own business, and the Brazilian economy, from little way to little way, deteriorates , as has happened in recent years,” he added.

The minister emphasized that this movement has nothing to do with raising the tax burden, but with repairing and recomposing the tax base, “so that we can face the expenses related to the financing of social, health and education programs, without the abuse of the interest that is practiced today in Brazil”.

A new tax rule, announced this Thursday (30) by the government, will replace the spending ceiling that has been in force since 2016 and limits the growth of expenses to the previous year, corrected by official inflation (National Consumer Price Index – IPCA). The new framework will limit expenditure growth to 70% of the previous 12-month revenue change. The idea is to combine an expenditure limit that is more flexible than the expenditure ceiling with a primary result target (result from public accounts without public debt interest).

Banco Central

In today’s press conference, Minister Fernando Haddad again criticized the high level of the basic interest rate, set by the Central Bank, but said that he is acting to bring the financial authority closer to the government. “I am trying, on my part, to play the best possible role in bringing the authority of the Central Bank closer to the government, so that it (BC) behaves like an agency of the Brazilian State, non-partisan, that does not get involved in politics, but that helps build a better economic landscape for investors.”

“My role, therefore, is to provide information, to take the measures that seem to me to be the most appropriate from the government’s point of view to address what matters to the Brazilian population, safeguard social expenses, social investments, which are very important”, added.

Last week, unanimously, the Monetary Policy Committee (Copom) of the Central Bank maintained the Selic ratethe economy’s basic interest rate, at 13.75% per annum.