Farm will conclude this week work on new tax rule, says Haddad – 02/03/2023 – Market

The Minister of Finance, Fernando Haddad (PT), said this Thursday (2nd) that his team will complete the design of the new fiscal rule this week, which will replace the spending ceiling — a mechanism that limits the growth of public expenses. to the inflation registered in the previous year.

According to Haddad, the model will then be shared with the rest of the government’s economic areas and taken for approval by President Luiz Inácio Lula da Silva (PT).

“We’re going to complete the work this week [do novo arcabouço fiscal] in the farm. We are going to have a position from the Treasury, which we are going to share with the economic area and inform the president. This month, we want our opinion on how the new fiscal framework should be made public,” he said.

The minister reinforced that the announcement of the new fiscal rule was brought forward to March so that the Bill of Budgetary Guidelines (PLDO) is forwarded to Congress already based on the new fiscal rule.

“O [Ministério do] Planning should forward next year’s LDO and the ideal is that the Budget Guidelines Law be prepared already based on the new rule”, he said.

The LDO project must be sent to the Executive for Congress by April 15 of each year, and be returned for sanction by July 17 of the same year. Within this schedule, without a new fiscal framework being presented beforehand, the start of the 2024 budget discussion, which should be 100% Lula, would have to be based on the rule that is in effect, and which the government rejects, the spending ceiling .

The objective, according to Haddad, is to “avoid rework” on the part of parliamentarians. “If Congress approves an LDO and a discordant, discrepant fiscal framework, it will have to rework the LDO. So, it makes no sense. What Congress has to do is approve an LDO and a framework that are consistent. We are going to put together two coherent pieces that Congress has to harmonize,” he said.

The minister also said that the idea is that the proposal for the new fiscal rule and the LDO be processed simultaneously in Congress.

“Walk together to avoid rework on both sides. The Executive does one part and the Legislative can opine, can change, but it has to operate in a coordinated way. The country cannot have two conflicting guidelines, that makes no sense at all”, Haddad continued, adding that, in his opinion, this also helps with monetary policy.

In recent years, the spending ceiling has become the main anchor of public accounts, being identified as the tool that helped control government finances. However, the rule has been circumvented several times, especially after the pandemic. Lula has repeatedly defended the abolition of the spending cap during the election campaign.