Chamber approves by 372 votes to 108 the basic text of the fiscal framework

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Text-based maintains provision that government spending can only grow up to 70% of revenue growth. The next step is the analysis of the highlights, which are suggestions for changing the rapporteur’s opinion. Voting score this Tuesday (23) of the basic text of the new fiscal framework in the Chamber of Deputies. Reproduction/TV Câmara The Chamber of Deputies approved on Tuesday night (23) the basic text of the bill establishing the new fiscal framework. The score was 372 votes in favor, 108 against and 1 abstention. To complete the vote, deputies still have to analyze the highlights, which are occasional suggestions for changes in the text. One of the highlights, proposed by PSOL, was voted on and rejected. It planned to remove the triggers for controlling expenses from the text (understand more below). The voting of the other highlights was for this Wednesday (25). The framework was drawn up by the government to replace the spending cap. At the ceiling, growth in government spending is limited to the previous year’s inflation. The framework is more flexible. In general terms, it links the growth of expenses to the growth of revenues. With this, the government tries to increase the investment power without compromising the public accounts. The central mechanism of the framework is: public spending growth is limited to 70% of government revenue growth (example: if revenue increases by 2%, expenditure can increase by up to 1.4%); even if government revenue grows significantly, it will be necessary to respect a fixed interval in the real growth of expenses, varying between 0.6% and 2.5%, disregarding the inflation of the period. Chamber plenary during vote on fiscal framework Pablo Valadares/Chamber of Deputies Changes in opinion Approval takes place after a series of meetings throughout the day. In the construction of an agreement, the rapporteur, deputy Cláudio Cajado (PP-BA), decided to change one of the points of the opinion that received the most criticism, especially from the opposition — which sets at 2.5% the real growth of expenditure in 2024. This exception, according to estimates by economists, would open up to R$40 billion to the Executive next year. The proposal sent by the government predicted real growth between 0.6% and 2.5%. In the first version of the rapporteur, the real growth in the first year of validity of the rule would already be at the upper limit of the band (2.5%), regardless of the increase in revenues. In the new opinion, the rapporteur removed this wording, predicting only that real expenditure growth in 2024 should follow the range between 0.6% and 2.5%. However, the text opens up a possibility for the government to increase expenses, through supplementary credit. Milestone, anchor or fiscal framework? This could occur after the second bimonthly assessment of revenues and expenses for 2024, which takes place in May, considering revenue growth for the full year of 2023 (ie, from January to December) and comparing with the projection for 2024. of 2024, the expenditure exceeds the real growth of the primary revenue actually achieved, the difference must be reduced from the calculation base and subtracted from the expenditure limit for 2025. Deputy Pedro Paulo (PSD-RJ) assesses that this section prevents, for example, that there is an exaggerated projection for 2024 just to increase expenses. The change is a middle ground found by Cajado: spending will have a ceiling linked to revenue and, at the same time, will not be fully impacted by the correction that still considers the 2nd half of last year, with revenue still under the government of Jair Bolsonaro . Fundeb The rapporteur also tried to explain a point about the Fund for the Maintenance and Development of Basic Education (Fundeb), the main source of funding for the sector, which was included in the spending limitations in the amendments made by the rapporteur. These features are currently outside the current spending cap. In the new text, it is clear that the growth of the Union’s supplement to Fundeb, provided for in the Constitution and linked to state revenue, is added to the limits provided for in the framework. According to Cajado, the new rules will not harm the fund’s resources. However, in the evaluation of deputies from the education bench, whenever the state Fundeb revenue grows more than the real growth in expenditure allowed by the new regime, the Union’s complementation will compress the other expenses. The bench’s assessment is that, in 2024, the impact could be R$ 3 billion. “Fundeb has always been outside the spending cap for one reason: experience shows us that when the bills are tight, education is always the target of cuts. Congress has to say clearly: spending on education is investing in our future. And that always has to be a priority. Therefore, both Fundeb and complementation have to stay outside the ceiling”, said the coordinator of the Education Front, deputy Tábata Amaral (PSB-SP). DF Constitutional Fund Deputies from the Federal District protested against Cajado’s text, which included the Constitutional Fund of the Federal District (FCDF) in the rules of the framework. In the bench’s assessment, the fund’s resources – which are used to pay for public safety in the DF, in addition to health and education – will be reduced with the rule. The issue is the subject of a highlight in the PL, which calls for the withdrawal of the fund from the limits of the new fiscal framework. In a letter addressed to the president of the Chamber, Arthur Lira (PP-AL), to the president of the Senate Rodrigo Pacheco (PSD-MG) and to Cajado (PL-BA), the DF bench argues that Brasília, in addition to being the seat of the three powers, have embassies and large events, which requires increased security. According to the parliamentarians, in 2023, 40% of the DF budget (about R$ 23 billion) will come from the FCDF. Despite the appeals, Cajado decided to submit the fund to the framework. Commitment limitation The rapporteur also included the provision that the commitment limitation and payment of investment expenses should follow the proportion of other discretionary expenses. It is the rule that is already followed today for imposing parliamentary amendments – individual and bench. When there is a need for contingency, the government needs to block non-mandatory expenses, which involve resources for investments and funding of the public machine. The purpose of the new section, then, is to prevent the blocks from falling entirely on investments In the first version of the opinion, Cajado returned with the need for a bimonthly assessment of revenues and expenses – today it already works this way, but the project sent by the government to Congress foresaw that this evaluation would be done only three times a year. Triggers Already in the first version of the opinion, the rapporteur included the prediction of “triggers”, mechanisms that intend to force the containment of expenses whenever government spending exceeds certain limits. If revenues do not progress as projected, the government will be forced to curb expenditures; If, even with contingency expenses, the government fails to meet the fiscal targets (zeroing the deficit in 2024 and having a surplus in 2025 and 2026), gradual triggers will be triggered. Check out what they are below. 1st year of failure to meet the target If the government fails to meet the established fiscal targets, in the first year the following will be prohibited: creation of positions; changing career structure; creation or increase of aid; creation of mandatory expenditure; readjustment of mandatory expenditure above inflation; expansion of subsidies and subsidies; concession or extension of tax benefit. 2nd year of non-compliance with the target: If the government fails to meet the target for the second consecutive year, new prohibitions will be added to the existing ones, such as: increases and readjustments in personnel expenses, such as salary increases; admission or hiring of personnel, except for replacement of vacant positions; public tender, except for the replacement of vacant positions. Penalties Non-compliance with fiscal targets will not be a crime. On the other hand, non-compliance with contingencies and triggers is currently already an infraction of the Fiscal Responsibility Law – subject to punishment.

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