Lira: Chamber will try to approve fiscal framework in April – 03/30/2023 – Market

The president of the Chamber of Deputies, Arthur Lira (PP-AL), said this Thursday (30) that the House will work to approve the new fiscal rule proposed by the government of Luiz Inácio Lula da Silva (PT) still in April.

Lira stated that he evaluates the presentation of the rule as a “good start”, but indicated that it will be necessary to make some adjustments.

“It’s a good start, it’s part of what he’s already been dealing with. Of course, with a few more details of what he intends to do, the goals, all the effects. The framework will be a guideline, more flexible than today’s ceiling. But the ‘x’ will be our negotiations to see which projects and which votes we will have to do afterwards to adjust the framework”, said the parliamentarian to journalists.

“As, for example, in the thesis that the government defends of not raising taxes and making those who do not pay taxes now pay”, he continued.

Lira stated, however, that he could not delve into his assessment of the topic before the text was sent to the Chamber. “You have to wait [o texto] come [para a Câmara], I can’t say anything. He [Haddad] explained yesterday [quarta], he explained to the Senate, he was supposed to make some adjustments to the text and send it to Congress. When he orders it, we take a stand”, continued the mayor.

Lira participated in a meeting with the Minister of Finance, Fernando Haddad (PT), and leaders of the Chamber on Wednesday night (29). He said that it was not discussed at the meeting who will be the rapporteur for the fiscal rule, but stated that it will be someone from his party, Progressistas. “But the name hasn’t been decided yet.”

The new fiscal rule presented by the government foresees a real growth of expenses between 0.6% and 2.5% per year. These are the floor and maximum limit for advancing spending.

How did you anticipate the Sheetthe government proposes a fiscal rule in which the growth of federal expenditures is limited to 70% of the increase in net primary revenue observed in the last 12 months up to the month of June —data available at the time of preparation of the Budget, presented in August of each year.

In practice, the government intends to work with a new restriction on expenses, which would have real growth (above inflation), but at a slower pace than revenue. This combination is considered crucial for improving the situation of public accounts in the coming years and stabilizing the path of public debt.

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UNDERSTAND THE CHANGE IN TAX RULES

What is the new fiscal framework?

It is the set of control rules for public accounts. The government’s proposal seeks to replace the current spending ceiling, created during the government of Michel Temer (MDB).

Why is the government replacing the roof?

The government considers that the spending ceiling has limited the State’s ability to promote public policies. Despite this, it recognizes that it is not possible to do without a control rule for expenses.

What is needed for the roof to be replaced?

A constitutional amendment enacted at the end of 2022 establishes that the government must present, by August 31, a new proposal for a fiscal rule through a supplementary bill. Once the proposal is approved by Congress, it will replace the spending cap – which will be automatically revoked.

how is today

Spending ceiling: rule inserted in the Constitution and which has been in force since 2017. It prevents federal expenses from growing more than inflation from one year to the next.

Primary outcome goal: provided for in the Fiscal Responsibility Law, is stipulated in numerical value each year in the Budgetary Guidelines Law. The result is obtained from the difference between income and expenses in the year. Today, it is a unique goal and needs to be fulfilled by the Executive.

What is the government’s proposal?

Expenses allowance: instead of the spending ceiling, spending could grow by the equivalent of 70% of the rise in revenues (for example, if revenues rise by 2%, spending can rise by up to 1.4%). There will, however, be minimum and maximum limits for this variation in spending. The minimum percentage prevents a sudden or temporary drop in tax collection from forcing the government to reduce expenses. The maximum limit, on the other hand, removes the risk of the Executive expanding expenditures in an exaggerated way when there is a peak in revenues.

Primary outcome goal: instead of a single goal of public accounts results to be pursued by the government, there will be a projected range for the fiscal year and the Executive will need to close the fiscal year within this band.

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SEE THE ROUTE OF THE NEW TAX RULE IN THE CONGRESS

Where will the procedure begin?

As it is a supplementary bill forwarded by the Executive Branch, the text will begin to be discussed in the Chamber of Deputies. The House will have the final word on the content, in case the Senate promotes changes during the appreciation.

Where can the proposal for a fiscal rule go through the Chamber?

A complementary bill of law is usually forwarded for analysis by commissions specializing in topics covered by the proposal —called merit commissions. There are also the Finance and Taxation and Constitution and Justice committees, which can analyze the merits and/or admissibility of supplementary bills, that is, whether they are in accordance with budgetary rules and constitutional precepts. All must also pass through the plenary.

Can the project go to a special commission?

Projects dealing with matters relating to more than three merit committees are sent to a special committee, which replaces all others.

Can it be handled urgently?

The plenary may approve a request for the supplementary bill to be processed on an urgent basis. Generally, this depends on the leaders’ agreement. The President of the Republic may also request an urgent vote on a project of his own initiative. In this case, the proposal must be voted on within 45 days, or it will block the agenda of the Chamber of Deputies or the Senate (depending on where it is at the time).

How does the emergency system work?

A project under an urgent regime can be voted quickly in plenary, without the need to go through the committees. The rapporteurs of the proposal in the committees give their opinion during the plenary session. The text is read from the tribune, and there is the possibility of an immediate vote.

What does it take for the proposal to pass Congress?

Complementary bills require an absolute majority of favorable votes, that is, more than half of the members of each House. This means gathering at least 257 votes in the House and 41 votes in the Senate.

What is the final course of the procedure?

A complementary bill sent by the Executive is considered first by the Chamber of Deputies. Then the text goes to the Senate. If there are no changes, the text goes to the presidential sanction.

However, if the senators make changes to the text, the project returns to the Chamber, which will have the final word — the deputies can accept the senators’ changes or restore the text originally approved by the Chamber. After a new vote, the text is sent to the President of the Republic for sanction.

The Chief Executive has 15 working days to sanction the project in its entirety or with partial vetoes in some devices, or even veto it entirely. All vetoes are validated by Congress, which can overturn them with an absolute majority of deputies (257) and senators (41).