New fiscal framework: see point by point the text approved in the Chamber

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The basic text of the proposal was approved by the deputies on Tuesday night (23). Parliamentarians are still going to discuss highlights that may change the project. Milestone, anchor or fiscal framework? The Chamber of Deputies approved the basic text of the new fiscal framework, on Tuesday night (23). In general terms, the proposal replaces the “expenses cap”. The project, sent by the government and suffered, alterations of the rapporteur Cláudio Cajado (PP-AL). Deputies will still vote on highlights that may change the text on Wednesday (24). The fiscal framework limits government spending and sets rules for spending growth in coming years. The text foresees: that a bimonthly assessment of revenues and expenses be carried out; that public spending growth is limited to 70% of government revenue growth, if the target is met (example: if revenue rises by 2%, spending may increase by up to 1.4%); that public spending growth is limited to 50% of government revenue growth, if the target is not met (example: if revenue rises by 2%, expenditure may increase by up to 1%); that even if the government’s revenue grows a lot, 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; About the fixed interval, check out an example in the image below, taking into account that government spending was BRL 700 in a scenario with 5% inflation. Understand the fiscal framework in g1 numbers ❓ What are the triggers? “Triggers” are mechanisms that force expenditure containment whenever government spending exceeds certain thresholds. See what they are: if revenues do not progress as projected, the government will be forced to contingency expenses; if, even with contingency spending, the government fails to meet 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. 1️⃣ 1st year of non-compliance with the goal If the government fails to comply with the established fiscal goals, 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. 2️⃣ 2nd year of non-compliance with the target If the government fails to meet the target for the second year in a row, new prohibitions will be added to 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 tax goals 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. ❌ Out of the triggers At the request of President Lula (PT), the project’s rapporteur left out of the expenses containment rules: real readjustment of the minimum wage, with an increase above inflation. ▶️ Latest amendments by the rapporteur Before voting on the basic text, rapporteur Cláudio Cajado made changes in relation to the growth in expenses for 2024 and the Fund for the Maintenance and Development of Basic Education (Fundeb). In the first version of the rapporteur, the real growth of expenses in the first year of validity of the rule (2024) 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%. On the other hand, the text opens up the possibility for the government to expand expenses through supplementary credit after the bimonthly evaluation of expenses scheduled for May. The possibility of opening up credit will consider the growth in revenue for the year throughout 2023, compared to the projection for 2024. If, at the end of 2024, expenditure exceeds the actual growth in primary revenue actually realized, the difference will be reduced from calculation basis and subtracted from the spending limit for 2025. Furthermore, in the new text, the growth of the Union’s supplement to Fundeb, provided for in the Constitution and linked to state revenue, will remain within the ceiling stipulated by the framework. The rapporteur stated that the new rules do not limit the fund’s resources. ALSO READ Fiscal framework: how the rules would work if they were applied to a family budget New framework: see how each deputy voted Tax reform: House rapporteur says he will present an opinion on June 6 VIDEOS: all about politics

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