The government would have obtained a primary surplus in 2024 if the National Congress had not extended the payroll tax exemption for 17 sectors of the economy, helped small municipalities and extended support for the events sector, the Minister of Finance said this Friday (20). , Fernando Haddad. At a breakfast with journalists, the minister said that the projections presented by the economic team last year for the 2024 Budget were correct.
Minister Fernando Haddad, during breakfast with journalists – Fabio Rodrigues-Pozzebom/Agência Brasil
According to the minister, if Congress had fully approved the Provisional Measure 1,202published at the end of 2023, the government would not have lost R$45 billion in revenue this year. Of this total, around R$20 billion comes from tax relief, R$15 billion from the Emergency Program for the Resumption of the Events Sector (Perse) and R$10 billion from the reduction in contributions to Social Security by small municipalities.
According to Haddad, the government would have obtained a primary surplus (a positive result in the accounts without interest on the public debt), even with extraordinary credits of around R$33.6 billion for the reconstruction of Rio Grande do Sul.
“If we had managed to approve Provisional Measure 1,202 in full, Brazil would have obtained a primary surplus this year, even with Rio Grande do Sul, which was completely unforeseen,” stated Haddad.
Estimates
According to the minister, the projections presented by the Ministries of Finance and Planning, in August last year, for this year’s Budget turned out to be correct. The problem, highlighted Haddad, was the renewal of a series of tax incentives that were not foreseen in the 2024 Budget.
“The Treasury’s planning last year was impeccable from the point of view of the fiscal framework. If Congress had approved all the measures [da MP 1.202]we would have had a real surplus since 2013. The surplus in 2022 was not consistent. He was fake [falso]the result of default, rushed privatizations, extraordinary dividends, accounting makeup”, said the minister, criticizing the previous government.
Published in the last days of last year, MP 1,202 had almost all of its content transferred to bills. The payroll tax relief and aid to small municipalities was extended until 2027, with gradual tax relief until then, following an agreement between the government, Congress and the Federal Supreme Court.
Document that guides the execution of the Budget, the Bimonthly Revenue and Expense Assessment Report estimates a primary deficit of R$64.426 billion for 2024, around 0.56% of the Gross Domestic Product (GDP). The bill includes expenses with Rio Grande do Sul, fighting forest fires and the payment of late court orders.
The report, however, does not include the estimate of around R$20 billion in pooling, committed (authorized) resources that cannot be spent by ministries, such as tax amendments, and cannot be officially projected because the value will only be known in January. If the pooling enters the account, the deficit forecast drops to around R$44 billion, which would mean a primary surplus of around R$1 billion this year.
Tax benefits
Haddad reiterated that the government is looking at tax expenditures (tax waivers due to incentives for sectors of the economy) and said that there are several undue benefits. The minister also criticized the economic vision that says the government only needs to cut spending, disregarding tax benefits, which amount to around R$600 billion per year.
“We have to look at tax expenditure. These are often undue, unwanted and spurious benefits. And I’m talking about primary spending [despesa que se reflete no resultado primário]. In fact, this is a constitutional requirement. Why is there so much value placed on correcting primary spending and not correcting tax spending?”, he asked.
The minister defended the fiscal framework in force since last year and said that the rules are solid. “The great virtue of the framework, unlike the previous spending ceiling, is that everyone was lying in a splendid crib because there was a ceiling, but they didn’t take care of the storage floor. We have to look at both things. I don’t know anyone, not even the most orthodox economists, who is against theoretically looking at tax spending and primary spending”, commented Haddad.
“Few companies are responsible for this year’s public deficit. Around 20 thousand companies benefited this year at the expense of 20 million companies. This needs to be said. The three powers must harmonize to guarantee structured public accounts. Last year’s Revenue and National Treasury accounts on the Budget [deste ano] they were right,” he added.
Application and vacation
Haddad ended the breakfast with journalists by saying that he is not working with the possibility of being a candidate in 2026 and justified his 20-day vacation in January. The minister said he took his vacation early to take care of his wife, who will undergo a minor surgery. During this period, he will work from home, in São Paulo.
The minister’s vacation will be from January 2nd to 20th next year. In his place, the executive secretary, Dario Durigan, number 2 in the department, will take over the Ministry of Finance. The granting of Haddad’s vacation, at a time when the dollar exceeds R$6, provoked criticism from economists.
“My wife is going to undergo a surgical procedure, a simple thing. What did I do to be able to be with her at night? I’m going to take a vacation and work in São Paulo. The news that came out on social media is that I’m going on vacation in the middle of the crisis. That’s my fault. I should have prevented myself. It’s hard to live in these times. I didn’t imagine the evil of people who have me as an enemy, as an adversary”, said Haddad.
