Tax framework: voting is postponed to the week of the 15th – 5/3/2023 – Market

Finance Minister Fernando Haddad said this Wednesday (3) that the vote on the new fiscal framework in the Chamber of Deputies should wait for the week of May 15, when he will have returned from a trip to Japan, where he participates of the G7 ministerial meeting.

The new date represents a postponement in relation to the initial forecast of the mayor, Arthur Lira (PP-AL), who, in April, said that the text of the new fiscal rule to replace the spending ceiling could be approved in the House by 10 of May.

The schedule was discussed at a meeting this Wednesday between Haddad, Lira and the rapporteur for the framework, deputy Cláudio Cajado (PP-BA), at the official residence of the Chamber.

“We agreed with the rapporteur on the timetable for presenting the report on the fiscal rule and a tentative date for voting,” said Haddad.

“I made some considerations, which were considered, that the vote take place when President Arthur Lira and I are back, he from the United States, I from Japan. Because obviously, in the final stretch, there may be some question, any doubt, any question of wording, of interpretation,” he said.

Haddad indicated, however, that Cajado can come up with a solution to expand the guarantees that the rules will be complied with. The text sent by the government provides that the contingency of resources to ensure the achievement of goals is optional and expressly says that failing to comply with them does not constitute an infraction. These points have aroused reservations among parliamentarians and market agents.

“What you need, what they are treating as ‘enforcement’, which is you having greater rigidity [para o cumprimento da regra], the rapporteur himself is dealing, but in accordance with the Constitution, in accordance with the most modern principles of public administration, which is how this issue is dealt with, seriously. Sometimes we go with a rule that is a Brazilian jabuticaba that doesn’t work, as it hasn’t worked in the last four years”, he said.

Haddad did not detail which devices could be adopted to expand these guarantees and said that the conversation at the official residence was more focused on calendar issues. According to him, there is a concern that the rapporteur present the text in advance to the other parliamentarians and also to the government, to avoid possible problems.

“We will have the clearest wording possible. It is not a rule for a government, it is a rule for the Brazilian State”, he said.

After the meeting, Cajado released a note reaffirming his commitment to present his opinion by May 10. An “initial draft” of the opinion, according to him, was presented to Lira and Haddad this Wednesday.

“The proposals presented by me and by our technical team were well evaluated, including by the minister, who offered to discuss the changes with the government teams”, stated the rapporteur.

The minister said he hoped that the opinion would maintain the “backbone” of the proposal, which combines a limit on spending growth and a flexible primary result target —obtained from the difference between revenues and expenditures.

The pace of increase in expenses in each year will be linked to the variation in revenues, provided that it is within the range of 0.6% and 2.5%. These will be the floor and cap of actual increase in spending under the new rule.