The proposal was approved with 372 votes against 108; MEPs are now analyzing the amendments
BRASILIA – A House of Representatives approved, with 372 votes in favor and 108 against, the basic text of the art tax framework, new rule for the control of public accounts. Being a complementary bill, the framework needed 257 votes in favor (absolute majority) to be approved. The House is now considering amendments and highlights (requests for text changes
After the meeting with the leaders of the party and the mayor Arthur Lira (PP-AL), the rapporteur, the deputy Claudio Cajado (PP-BA) announced a modification of the text which conditions the increase in expenditure in 2024 to the increase of revenue. This was to minimize a loophole that had been inserted in its report, which allowed the government to significantly increase expenditure on the introduction of the new rule, allowing that in 2024, exceptionally, the growth in expenditure would be due to the ceiling of the new rule spending limit – 2.5% above inflation.
Finance Minister Fernando Haddad has acted forcefully behind the scenes to prevent the new version of the replacement draft of the new fiscal framework from limiting public spending expansion in 2024, the first year of the fiscal rule.
After Estadão revealed that the first version of the replacement increased the spending space by BRL 80 billion, MEPs lobbied the rapporteur, MEP Claudio Cajado (PP-BA), to change the text. The central point of the collections was the gap that allowed the increase in expenses in 2024 to be at the maximum of what was allowed by the project, 2.5% above inflation, regardless of the trend in collections.
The opposition and even parties allied to the Lula government reacted so that the loopholes could be filled. During the meeting of the group leaders, before the start of the voting, the possibility of removing this exception from the text for next year, defined by the parliamentarians as a “transitional rule”, was discussed.
According to Estadão, Haddad was against it and sewed an intermediate alternative on the phone with the mayor, Arthur Lira (PP-AL).
The solution found was a formula for calculating the space for increasing expenses in the first year as a rule, in 2024, even more complex and complicated.
Under the new version of the bill, the government will be able to introduce the 2024 budget bill to Congress in August, setting spending growth at 70 percent of revenue growth in the 12 months to June this year. year, in a range of 0.6% and 2.5% above inflation.
In May 2024, however, the government will be able to increase the scope for new expenditure based on an expected increase in revenues by the end of next year relative to this year’s actual collection. The difference, if positive, could guarantee further space for new expenses through supplementary crediting by the Budget.
If this projection does not materialize, the government will have to “pay back” the surplus in the 2025 budget. This means, in practice, a reduction of the ceiling in 2025, giving the government more time to implement measures to increase revenues.
Minister Haddad’s articulation effort is attributed to the fact that 2024 will be a tighter year due to higher spending already contracted. Among these, the policy of enhancing the minimum wage and the return of the constitutional levels of health and education linked to the collection.
Despite the negotiation, the change has not been fully accepted by the grassroots parties. The leader of União Brasil, the deputy Elmar Nascimento (BA), said he was against Haddad’s alternative proposal, which would fix the adjustment only to 2025. In a preliminary analysis, the specialists consulted by Estadão underline that the change made the even more complex rule.
As shown the Stadiumcalculations by financial market economists show that the new fiscal framework will allow the government to increase spending by up to R$80 billion in 2024 and 2025.
The Ministry of Finance, Cajado and the House technical team dispute the information and say that the changes made by the House will allow for an increase in spending of about R$ 12 billion in 2024.
On Wednesday, Haddad said he vouched “over 300 votes”.
Source: Terra
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