Text of the fiscal framework will undergo changes, points out rapporteur

At an event held by the Frente Parlamentar Pelo Brasil Competitivo to discuss the proposal, Cajado classified the fiscal framework as “intelligent” and “modern” and said he was open to considerations about the project. Cajado pointed out that the schedule for voting on the agenda depends on the president of the Chamber of Deputies, Arthur Lira (PP-AL).

According to the Ministry of Finance, one of the main goals of the new fiscal rule is to zero the primary deficit as early as 2024. In subsequent years, the proposal provides for a surplus in public accounts of 0.50% in 2025 and 1% in 2026.

For the president of the Parliamentary Front for Competitive Brazil, federal deputy Arnaldo Jardim (Cidadania-SP), the new framework needs to present measures to reduce expenses.

“I think the framework has a hole, which is a hole that the government justifies with an increase in revenue that makes the balance possible. And what the government has presented so far for this increase in revenue does not seem to be enough. We emphasized the need for expenditure to be considered with more emphasis, giving a sign of controlling expenses as well, so that the entire framework proposal could have more credibility”, he points out.

For deputy Pedro Paulo Teixeira (PSD-RJ), the fiscal framework offers several risks by not controlling expenses.

“I believe revenue targets are too bold. Apart from the effects that it can generate for the economy with the withdrawal of R$ 200 billion from the economy to bring to state spending. I believe it is very difficult for you to review the incentives and be able to reduce tax litigation, increase the collection base enough to handle these R$ 200 billion. So, I am very concerned that the framework manages to produce the effects that are intended in what was presented”, he points out.

achievement of goals

One of the points most criticized by parliamentarians is that the project does not establish punishment against the President of the Republic for eventually failing to meet the goals of result in public accounts. According to Jardim, for the project to be approved it is necessary to have more explicit norms that force the effective fulfillment of the goals.

“We are going to work towards having greater detail on the expense control instruments. We are also going to discuss the question of sanctions in relation to responsibility, in case what is in the statement cannot be fulfilled. The foreseen sanctions are a public retraction, and then a cut in the following year, reducing the expenditure growth, contrary to the present, from 70% of revenue growth to 50%, seems insufficient to us. We think we need to have more explicit norms that establish sanctions and force the effective fulfillment of goals”, he points out.

The parliamentarian also believes that the framework, as it was presented, can be seen as a collection movement by the government and raise doubts about the tax reform.

“What remains in doubt is the extent to which it needs an increase in the tax base for it to be able to balance. If the government does not present this, uncertainty will remain for the tax reform, because many may imagine that the government intends, in the tax reform, to fachieve this balance, this revenue supplement, which would no longer be neutral but increase the collection base”, he explains.

The new framework will replace the spending cap, which now ties federal spending to the previous year’s inflation. According to the Ministry of Finance, the measure is essential to guarantee the stability of the Brazilian economy, reduce inflation, stimulate private investment and attract new international investments, depending on the behavior of revenues.