Temer’s former minister must be rapporteur for tax rule – 02/14/2023 – Market

The president of the Chamber of Deputies, Arthur Lira (PP-AL), promised federal deputy Mendonça Filho (União Brasil-PE), former minister of Michel Temer (MDB), to report on the project that will be sent by the government to the Legislature to define the country’s new fiscal anchor.

The rule, to be proposed by the team of Finance Minister Fernando Haddad (PT), will replace the current expenditure ceiling, which limits expenditure growth to inflation variation.

The theme is central both for the government of Luiz Inácio Lula da Silva (PT), which will use the new rule as a benchmark for its policies until the end of its term, and for the market, which demands greater clarity about the course of the debt trajectory. from the country.

According to Lira’s promise, negotiation of the proposal will be in the hands of a parliamentarian who has already declared himself to be in opposition to the new Lula government.

Mendonça also voted in favor of the impeachment of former President Dilma Rousseff (PT), in 2016, and later became Minister of Education for Temer, who left the PT in charge of the Planalto Palace.

“The decision of the majority of the electorate is sovereign in a democracy. I congratulate President-elect Lula on his election. As an elected deputy I will be, in Brasília, in the opposition, working for Brazil and defending the interests of Pernambuco”, wrote Mendonça Filho in his account on Twitter on October 30, 2022, after the proclamation of Lula’s victory in the second round.

According to reports, Lira indicated to Mendonça Filho that the deputy would be the rapporteur for the proposed fiscal anchor in January.

The former minister wanted to be the rapporteur for the tax reform, but the post was the target of greed in the negotiations for Lira’s reelection. As he showed Sheetthe MDB proposed support for the current president of the House, under the commitment that the tax rapporteur would remain with deputy Aguinaldo Ribeiro (PP-PB).

Ribeiro was rapporteur for PEC (Proposed Amendment to the Constitution) 45, filed in 2019 by the national president of the MDB, Deputy Baleia Rossi (SP), and which today is one of the starting points for the discussion of tax changes in the National Congress.

With that chair already occupied, Lira then offered the deputy to report on the fiscal framework. The commitment was reinforced last week, on the eve of the Chamber election, when Mendonça Filho tried to launch a separate candidacy for the first Secretariat of the Board of Directors, rivaling a deputy from his own party, Luciano Bivar (União Brasil-PE).

Mendonça’s entry into the race would create unnecessary noise for Lira’s re-election. For this reason, the president of the Chamber acted personally to avoid a split in União Brasil.

Mendonça Filho is now one of the party’s main leaders and maintains a critical stance against the Lula government. To the Panellast year, the parliamentarian defended that União Brasil would oppose the PT administration.

Currently, he advocates that the party remain independent, even though the party has appointed three ministers in the composition of the new government.

In the economic field, Mendonça tends to be more liberal than the PT, which can lead to clashes between the government and the deputy in discussions of the new rule during the course of Congress.

At the end of November 2022, when the Legislative was debating a PEC to authorize the expansion of expenses this year, Temer’s former minister publicly criticized the PT’s proposal, which at that time sought an extra space of R$ 198 billion, without a defined deadline. .

“Everyone knows that breaking down the ceiling will generate inflation, high interest rates and unemployment. The poorest will pay the bill for the fiscal imbalance. The PEC must exclusively finance Bolsa Família and be valid for a maximum of one year”, defended Mendonça Filho.

More recently, he also condemned Lula’s pressure on the Central Bank because of interest rates, considered excessive by the PT government. “President Lula continues to conspire against economic stability. Not seeing that an independent Central Bank is one of the bases for inflation under control is wanting to relive the economic disaster of the Dilma administration,” he wrote.

The proposal for a new fiscal anchor is still being prepared by Haddad’s team. The PEC that authorized the increase in spending set a deadline of August 31 for the government to submit the project to the Legislative, but the Minister of Finance has already said that he intends to anticipate the date and send the text by April of this year.

The proposal should be sent in the form of a complementary bill, which requires the support of 257 deputies and 41 senators to be approved. This is a quorum higher than the simple majority, but smaller than required in proposed amendments to the Constitution.

Some technical meetings on the subject have already been held inside the Farm. According to interlocutors, a first design of the new rule should be completed by the beginning of March, when it will still need to go through validation by Haddad and also by the Planalto Palace.

The Secretary for Economic Policy at the Ministry of Finance, Guilherme Mello, said at the end of January that controlling expenses is the best instrument to manage the trajectory of the public debt and that this idea is being taken into account in the preparation of the new fiscal framework.

The technicians’ concern is to draw up a rule that creates the conditions for a credible path for the public debt, while giving the government flexibility to deal with unforeseen situations, such as drops in revenue or moments of more acute crisis.

The technicians’ main criticism of the spending cap is precisely its rigidity — the rule stipulated a nominal spending cap, with few exceptions. The result, according to the diagnosis of the National Treasury itself, was a compression of investments, given the continuous increase in mandatory expenditures and the difficulties, including political ones, in moving forward with the revision of programs.

However, even if Haddad anticipates sending the proposed new fiscal framework to Congress, the tendency is for the debate on the anchor to advance only after the Chamber completes the analysis of the tax reform.

“As far as I understand the government’s intention: first [será priorizada] the tax reform and then [o Executivo enviará] the fiscal anchor within the period defined by the PEC”, stated Lira.

According to the president of the Chamber, the idea is that deputies vote on the tax proposal within three months to then analyze the project of the new fiscal anchor.