The mandatory spending cut measures presented by the federal government this week should be voted on in the Chamber of Deputies and the Senate by the end of this year, as predicted by the Executive and the leaders of the National Congress.
As there are only three weeks left until the start of the parliamentary recess, the idea is that the complementary bill (PLC) and the Proposed Amendment to the Constitution (PEC) that deal with spending cuts be considered in the Chamber in the next two weeks and, in the Senate, in the last week of legislative work, between December 16th and 20th.
On the other hand, the income tax reform should only be considered in 2025 with the aim of taking effect on January 1, 2026. The measures provide for the Income Tax exemption (IR) for those who earn up to R$5,000 and an extra 10% tax for those who earn more than R$50,000.
In a meeting with the ministers of Finance, Fernando Haddad, and Institutional Relations, Alexandre Padilha, this Wednesday (28), the president of the Senate, Rodrigo Pacheco (PSD-MG), committed to voting on the texts this year .
“Our commitment in the Senate is that, as soon as the Chamber of Deputies considers the PEC and the PLC, the Senate submits it directly to the plenary so that it can be ratified in review of what the Chamber does in relation to this package”, explained Pacheco. According to the senator, for now, no restrictions on the package have been presented by the leaders.
In a meeting with House leaders on Wednesday night (27), the President of the House, Arthur Lira (PP-AL), also committed to analyzing the projects this year, as confirmed by the Alagoas parliamentarian’s advisors.
Fernando Haddad highlighted that the leaders welcomed the measures. “The reaction of the leaders was very favorable, a very open spirit for dialogue. So, we leave here with the hope that we will build a good arrangement for the end of the year and to have a budget with smoother execution next year”, he commented.
Minister Padilha, responsible for coordination with the National Congress, informed that the texts of the projects had not yet been sent, as there was a determination to first present the ideas, evaluate the receptivity and then send the materials.
“What I heard is the commitment of the leaders of the Chamber, of all parties, of the leaders of the Senate, of all parties, expressed here by the president of the Senate, every effort to complete the vote by the end of the year, so that the we can build next year’s budget”, he highlighted.
In addition to the spending cut package, the Senate has the regulation of consumption tax reform to vote on. Before the end of the year, the Chamber and the Senate must also analyze the projects of Budget Guidelines (LDO) and the Budget Law (LOA) of 2025. Not to mention a series of projects that are on the agenda of both Houses, such as those that they deal with the expansion of tax immunity for churches, the regulation of Artificial Intelligence and gambling in Brazil.
Opposition
Meanwhile, the opposition leader in the Senate, Marco Rogério (PL-RO), criticized the government’s announcement for including, along with the spending cut, measures to exempt Income Tax. “Why does the market act in a suspicious, uncomfortable, negative way? Because the government takes with one hand and gives with the other. So, it is a government that has no commitment to the fiscal agenda”, he stated.
Asked by journalists whether the opposition would be against the IR exemption for those earning up to R$5,000, the opposition leader said that “it is necessary to study in depth all the measures, all the proposals that are being presented”.
Regarding the spending cut, Marco Rogério indicated that he will be against it. “The opposition has always defended the spending control agenda, it has always defended fiscal balance. It is not now that we are going to change our speech, but we are not going to embark on a proposal that is a big make believe, a proposal that promises a lot and delivers almost nothing”, he added.
Income
Regarding the income reform, the Minister of Finance, Fernando Haddad, informed that it will be analyzed separately from the spending cut and that the government’s idea is that it be a neutral change, that is, the exemption for those who earn less will have to be compensated by the taxation of those who earn more.
“The reform, both of consumption and income, is neutral from a fiscal point of view. No one is willing to vote for a reform that is not neutral. This will be observed in the ordinary law that regulates the matter of income reform”, stated Haddad.
Understand
Faced with the increase in mandatory spending, which threatens to break the limits imposed by the government’s fiscal framework, a series of expense containment measures were presented on Wednesday night and detailed today.
The package provides for a reduction in spending on minimum wage adjustments, continued payment benefits, parliamentary amendments and military pensions, among other expenses. It is estimated that the reduction will amount to R$327 billion in five years.
At the same time, the government announced the plan to submit to the National Congress, next year, a proposal for income tax reform, with the plan to exempt those receiving up to R$5,000 from Income Tax. To compensate for the loss of revenue, the government proposes to tax 10% more on those who earn more than R$50,000 per month.
