Government seeks BRL 168 billion to fill the gap in the Budget in 2024

The government of Luiz Inácio Lula da Silva (PT) will present this Thursday afternoon (31) the proposal for the 2024 Budget with a forecast of BRL 168 billion in extra revenues that are conditional on the approval of a series of measures by the Congress. The amount, still uncertain, is necessary to meet the objective of zeroing the primary deficit next year.

“The Ministry of Finance sent me the entire grid of revenue measures already contracted or those that are being processed by the National Congress. We did the accounting and saw that we need R$ 168 billion in revenue [para zerar o déficit]”, said the Minister of Planning and Budget, Simone Tebet, on Wednesday (30).

Most of the figure would come from the change in the prerogative of tiebreaker of the Administrative Council of Tax Appeals (CARF), administrative instance of tax disputes, currently in the hands of taxpayer representatives. With the return of the mining vote to the National Treasury, approved on Wednesday by the Senate, the Union would have access to an additional collection of R$ 54.7 billion.

This source of funds, as the newspaper “O Globo” found out, is part of an axis treated as “recomposition of the tax base and correction of distortions”, which also includes a provisional measure (MP) that will regulate the collection of IRPJ and CSLL on ICMS subsidies used for funding, which should yield, according to government projections, another R$ 37.3 billion.

On another front, where the government aims at what it calls “tax equality”, there is the MP that changes the dynamics of taxation of closed-end investment funds and the bill (PL) aimed at tax income from investments abroad, the offshore calls. The economic team expects, with the approval of the two measures by Congress, to raise another R$ 20.25 billion.

This axis also includes the proposal to extinguish the Interest on Equity (JCP) mechanism, a form of profit distribution among shareholders that exempts the company from paying IRPJ and CSLL. The impact on Treasury coffers would be R$10 billion.

The government must also propose new tax negotiation modalities for taxpayers, with the possibility of discounts, with the Attorney General of the National Treasury (PGFN) and with the Federal Revenue Service, which, it is expected, may result in additional R$ 12 billion and R$ 30 billion, respectively.

Whereas the regulation of electronic sports betting it could yield another BRL 700 million, according to a new estimate by the government – ​​initially there was talk of BRL 2 billion. Another BRL 3 billion would come from smaller revenues.

Market analysts still consider the achievement of a neutral primary result in 2024 to be unreliable, a prognosis aggravated by the setback suffered with the extension of the payroll exemption, approved by the Chamber this Wednesday. Contrary to forecasts, the government assesses the estimate of extra revenue as conservative.

Under Carf, the accumulated stock of disputed taxes today is R$ 1.1 trillion. “Traditionally, in a conservative account, 10% is reverted to Union revenue. So, we are adjusting this standard to something around 5%”, said a technician from the economic team to the column by Míriam Leitão, in the newspaper “ The globe”.

Also not accounted for in the Budget is an estimated revenue of R$ 25 billion with the change in the rules of the so-called transfer price, which starts to tax operations of multinationals with their branches abroad.

On Wednesday, Simone Tebet said that, based on the Treasury’s figures, the zero deficit target, although “audacious”, would be feasible for next year. “Today, we believe that, if all the variables that are being presented materialize, the numbers do not lie, they will say that we will have a zero fiscal target”, she said.

“The goal is audacious, nobody argues. The Minister of Finance [Fernando Haddad] have that awareness. I need all the variables to confirm, but I have to work with what is today’s variable, ”he said.

Measures proposed by the government to zero the deficit in 2024

Qualifying vote on Carf

• What is it: PL returns to the government the casting vote in the Administrative Council of Tax Appeals (Carf), an administrative body for tax litigation. Today, the tiebreaker is decided by a representative of the taxpayers.
• Status: PL approved in the House and Senate
• Fundraising potential: BRL 54.7 billion

IRPJ and CSLL on cost subsidy with ICMS

Periodic taxation of closed-end funds

Offshore income tax

End of Interest on Equity (JCP)

• What is it: Government wants to extinguish the mechanism that today allows the distribution of profits to shareholders without the incidence of tax for companies. According to Haddad, companies have used this modality to stop paying IRPJ and CSLL.
• Status: PL not yet submitted
• Fundraising potential: BRL 10 billion

Transactions with Revenue and PGFN

• What is it: Government will propose new tax negotiation modalities for taxpayers, with the possibility of discounts, with the Attorney General of the National Treasury (PGFN) and with the Federal Revenue Service.
• Status: Proposal not submitted
• Fundraising potential: BRL 42.1 billion

Taxation of electronic sports betting

Other measures

• Fundraising potential: BRL 3 billion