The Brazilian Federation of Banks (Febraban) released a note this Thursday (28) highlighting that the tax package initiativesannounced by the Minister of Finance, Fernando Haddad, are “in the right direction”, despite highlighting the “criticality of the fiscal framework” and pointing to a “stronger” adjustment in the future.
Among the measures cited by the federation are limitations on the readjustment of the minimum wage, changes to the salary bonus and the BPC (Continuous Payment Benefit) and the new rules for granting and monitoring Bolsa Família.
“Important measures in the pursuit of cost containment,” stated the federation.
With regard to the adjustment of the minimum wage, Febraban highlighted that “to the extent that the adjustment will have limits and will follow the rules of the fiscal framework itself (70% growth in revenue from the previous year, in the range of 0, 6% to 2.5%), the change will have a positive impact on social security spending and will prevent more space from being taken away from discretionary expenses.”
Another highlighted point was the restriction on the growth of parliamentary amendments, “which now follow the limits of the fiscal framework, by aligning another front of the Legislative Branch, which has already contributed to the fiscal adjustment effort”. In addition to considering the restrictions on super salaries of all three Powers of the Republic “meritorious”.
However, Febraban’s note also brings what it called “points of attention”, such as the non-inclusion of a review of the floors for health and education spending, with “growth above the limits of the framework”.
Furthermore, the document recognized that the announcement of income tax exemption for those earning up to R$5,000 will improve income distribution, but highlights the need for “these IR exemption measures, on the one hand, and on surcharges on the highest income brackets, on the other hand, do not compromise the effort to achieve expenditure containment in the amount necessary for fiscal balance”.
Finally, the note, signed by the president of Febraban, Isaac Sidney, concludes: “With all the difficulty of reconciling the various demands that challenge fiscal balance, the announced package was another important step by the government to contain the growth of debt public, but the country will need to continue to persevere and aim to interrupt the trajectory of spending expansion”.
