The initial estimate was a loss of R$16.2 billion; The change comes after the meeting with the Treasury, which sees a tax-neutral proposal
BRASÍLIA – Budget consultancy by Federal Senate (Conorf) reduced the estimated three-year deficit from R$ 16.2 billion to R$ 12.3 billion with the tax exemption project Income tax approved in the House. The bill was redone later meeting with members of the economic teamlast week, as shown by the Estadao.
The technical note analyzes the changes made by the Chamber of Deputies, who approved the proposal unanimouslybut with changes in the form of project compensation compared to the original proposal, sent by the federal government. As a result, Conorf expects, in a conservative scenario, losses of R$4.45 billion in 2026, R$3.05 billion in 2027 and R$4.82 billion in 2028, for a total of R$12.3 billion.
When questioned, the Ministry of Finance specified in a note that the project approved by the Chamber “remains neutral from a fiscal point of view”.
“The Treasury states that it has already taken into account in its accounts the impact of the advance of dividends, even if paid later. For this reason, the Treasury considers that the project remains fiscally neutral,” he specified.
Representative Arthur Lira, through his advisors, said the changes were specific and came after dialogue with the economic team (read the full note below).
“The pillar of fiscal neutrality was the absolute principle that guided all phases of the drafting of the proposal, both in the extensive work of the Special Commission and in the deliberations in the Plenary”, we read in the text.
The income tax exemption for those earning up to R$5,000 is one of the Lula government’s main measures to boost the president’s popularity in next year’s elections. The proposal reduces the lack of progressivity in income taxation and requires proof of payment of a minimum of 10% income tax for those earning R$1.2 million per year.
In the Senate the project is reported by Senator Renan Calheiros (MDB-AL). In the Chamber, the speaker was entrusted to the deputy Arthur Lira (PP-AL). Both are rivals in politics, and the government fears this will happen arm wrestling could put you at risk approval of the proposal by December 31st, so that its valorization begins on January 1st of the following year.
The original proposal sent by the Treasury provided for full exemption from income tax for those earning up to R$5,000 and a discount for monthly income up to R$7,000. At the Chamber, this range of discounts has increased to R$7,350.
According to calculations by the Senate consultancy firm, this increase will lead to an increase in project waivers of R$1.6 billion in 2026, R$1.72 billion in 2027 and R$1.84 billion in 2028.
Another change that will impact the project, according to the Senate’s advice, was the possibility that the distribution of profits and dividends approved by companies until December 31 of this year will be paid until 2028.
“The expected behavior is for companies to anticipate the distribution of profits and revenues to the year 2025,” the study states.
The Treasury, as noted above, says it has already taken this effect into account.
The same effect, according to Senate advice, could occur with the taxation of profits and dividends abroad.
The study also made two other, more optimistic impact estimates, predicting a shortfall of R$5.5 billion out of R$8.91 billion over three years. However, it is recommended to use the conservative scenario, for reasons of prudence.
“Out of an abundance of caution, it is suggested to adopt the most conservative scenario as representative of the potential fiscal impact of the proposal. Therefore, it is estimated that the approval of PL No. 1.087, as formulated by the Chamber of Deputies, would result in a revenue loss of R$4.45 billion in 2026, R$3.05 billion in 2027 and R$4.82 billion in 2028?
Answer by Arthur Lira
See below the note sent by Congressman Arthur Lira.
“The press office of Fed Vice President Arthur Lira informs that the pillar of fiscal neutrality was the absolute principle that guided all stages of the drafting of the proposal, both in the extensive work of the special committee and in the plenary deliberations.
“Furthermore, the preparation of the approved text was the result of an intense and productive dialogue with the technical team of the Ministry of Finance, providing a bill that combines fiscal justice, technical rigor and fiscal responsibility.
“The changes included in the project, constructed in agreement with the Executive, were specific and of an eminently technical or editorial nature, in order to guarantee greater clarity and legal certainty, fully preserving the core of the original proposal.
“With regards to the technical note on the financial and budgetary impact released by the Federal Senate, it is worth highlighting the following excerpt from the document: “Despite this, this Advisory does not have the necessary data to estimate this part of the calculated and approved profits from 2025, distributed from 2026 onwards.”
“It remains clear, therefore, that the document deals with premises adopted without any theoretical support to support them.
“It is worth mentioning that the Federal Revenue Agency has already started from the theoretical assumption of the non-distribution of half of the profits, a level higher than the 30% arbitrated by the Senate. Furthermore, Brazilian legal entities can now fully distribute the profits calculated in 2025, in any month of this year.
“It is deplorable that, out of pure politics and opportunism, the numbers are released without due justification and transparency, with the sole objective of confusing public opinion and interrupting the processing of an issue of such importance for the Brazilian population.
“We have a firm commitment to the Brazilian people to enact this law by December 31, 2025, so that its benefits will come into force on January 1, 2026. Given this urgent deadline, creating noise or unfounded bottlenecks in the legislative process is a risk we cannot take.
“We hope that the federal Senate will carry out a calm and technical analysis of the issue, keeping the focus on the immense social and economic benefits for the country.”
Source: Terra

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