Budget 2024: government estimates that revenue will reach the highest level in 14 years

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Text sent to Congress predicts an increase of R$282 billion and increases revenues to 19.2% of GDP. The economic team announced a series of measures to try to eliminate the deficit in public accounts. A worker checks sheets of banknotes during a press visit at the Casa da Moeda do Brasil, in Rio de Janeiro,. Sergio Moraes/Reuters The federal government estimates that government revenue will reach, in 2024, the highest level in 14 years – that is, since the end of President Luiz Inácio Lula da Silva’s second term in 2010. This comparison takes into account net current revenue – what remains of the collection after transfers to states and municipalities and can be used by the federal government. According to the projection included in the 2024 Budget proposal, already sent by the Ministry of Finance to Congress, net revenues should reach 19.2% of the Gross Domestic Product (GDP) in 2024. In current values, the government’s estimate is that net revenue will reach R$2.19 trillion next year, compared to R$1.90 trillion in 2023 (revised data). The projected increase from one year to the next is R$282 billion – around 15% more than that collected in 2023. For a historical comparison, however, experts prefer to use another indicator: the proportion between the collection and the Gross Domestic Product (GDP, sum of the wealth produced by the country in a year). See below the historical series of this relationship between revenue and GDP: In addition to being the highest level in 14 years, the net revenue projected for 2024 will also be, if confirmed, the second highest in history, second only to the record 20.2% of GDP in 2010. And it will be well above the average recorded between 1997 and 2022 (years already closed) – which is 17.8% of GDP. The increase in net revenue, according to the economic team, is a necessity to rebalance the budget. Last year, the elected government approved the transition PEC, which increased expenses by more than R$160 billion in 2023 to increase the Bolsa Família benefit to R$600, rebuild the budget for social areas, such as health and education, and boost investments. The fiscal framework, approved in August this year, made this increase in transition PEC expenses permanent. With the increase in spending, public accounts recorded a worsening of more than R$200 billion in the first seven months of this year. With the principle that the budget is balanced (no deficit), the government projects that total government expenses will amount to R$2.19 trillion – the same level as revenue. As a result, the expenditure x GDP ratio would also be 19.2%. See the historical series for this comparison: Total spending projected for 2024 is above the average for 1997 and 2022 (closed years) which was 17.4% of GDP, according to data from the National Treasury. Measures to increase revenue The economic team announced last week that it will seek to implement measures that increase revenue by R$168 billion in the year 2024. Of this total, however, only R$124 billion will remain with the federal government, informed the minister of Planning, Simone Tebet. The remainder will be passed on to states and municipalities through constitutional transfers. Among the actions to boost revenues are the taxation of offshore offshore companies and exclusive funds, recently announced. SEE THE COMPLETE LIST OF GOVERNMENT MEASURES TO INCREASE COLLECTION The objective of the measures to increase revenue is to seek a zero deficit in government accounts, an objective that appears in the 2024 budget proposal – which appears in the fiscal framework, the new rule for public accounts. However, the list to increase revenue also includes measures previously announced and recorded during this year, such as the resumption of the casting vote in Carf, the collegiate responsible for judging appeals from companies fined by the Federal Revenue Service. Some of them are the result of court decisions, which taxpayers continue to await clarification or contest in court, in addition to the taxation of international orders. Despite the announcement of measures to increase revenue, economists have criticized the lack of more concrete actions on the part of the economic area to cut public spending. Government promises to eliminate deficit in the 2024 budget with new revenues Haddad talks about the end of benefits Although the government is planning to increase net revenue in proportion to GDP, the Minister of Finance, Fernando Haddad, has said that the government’s objective is not to increase the tax burden. According to him, the actions aim to end benefits granted to some sectors and segments of society in the past and, with this, finance the increase in social spending promoted by the government. In March of this year, Haddad stated that the federal government does not intend to create new taxes or increase the rate of existing taxes for the general population. “If by tax burden we mean the creation of new taxes or an increase in the rate of existing taxes, the answer is: it is not on our horizon. We are not thinking about CPMF, we are not thinking about ending Simples, we are not thinking about reimbursing the payroll of payments”, declared the minister, on that occasion. The current economic team’s conception of increasing revenue contrasts with the vision of the former occupant of the portfolio, minister Paulo Guedes – who headed the Ministry of Economy for the last four years in the Jair Bolsonaro government. Guedes preached the reduction of the Brazilian State – through the spending cap mechanism (which has already expired) – and the reduction of taxes to increase the competitiveness of the productive sector. Budget Law Proposal: Haddad tries to ward off speculation that the government could give up on bringing the public deficit to zero in 2024; understand

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