The plenary session of the Federal Senate has approved the basic text of a new tax framework bill (PLP 93/2023). The version approved by the senators includes changes in relation to the text that came out of the Chamber of Deputies. The rapporteur, Senator Omar Aziz, accepted suggestions from colleagues to expand the list of exceptions to the rule that establishes a limit for the growth of public spending from one year to the next. These exceptions include expenses related to the Fund for the Maintenance and Development of Basic Education and for the Valuation of Education Professionals (Fundeb), constitutional transfers from the Union to the Constitutional Fund of the Federal District (FCDF), and spending on science, technology, and innovation.
These changes were among the main suggestions made by the members of the Economic Affairs Commission (CAE), and the collegiate approved the text with a large majority. However, despite these modifications, the complementary bill must still return to the Chamber of Deputies for a new vote before it can be brought to President Luiz Inácio Lula da Silva for his approval.
The substitute bill approved by the senators maintains all the fiscal rules and parameters defined by the deputies. This includes the primary result goals and the growth of expenses by 70% (or 50% in case of default) of the evolution of income, with a range of 0.6% and 2.5%.
One of the points of uncertainty was the parameter to evaluate inflation that will correct the spending limit. The version sent by the deputies maintained the current method of using inflation data from the 12 months up to June of the previous year. However, the difference between this inflation and the one verified from January to December can be used to increase the spending limit authorized to the government through complementary credit.
The text also allows for the incorporation of these amounts into the calculation basis of the spending limit for the following years, but only exceptionally in 2024. Additionally, the Executive Branch can increase planned expenses through complementary credit if there is a higher volume than projected in the Annual Budget Law (LOA), after the second bimonthly settlement of income and expenses.
The amendments slightly reduce the potential of the standard, but they are not expected to significantly change the scenarios for public accounts. However, calculations by the economic team indicate that the government must advance the LOA with an adjustment of between R$ 32 billion and R$ 40 billion due to the expected lower inflation in 2024.
Despite these adjustments, the overall fiscal rules approved by the deputies remain intact. The bill aims to provide clarity and stability to Brazil’s fiscal policy, ensuring responsible spending and sustainable economic growth.
Additional Piece:
The approval of the new tax framework bill by the Federal Senate marks an important step towards improving Brazil’s fiscal policy. This bill is necessary to bring stability and transparency to the country’s public finances, and it lays the foundation for sustainable economic growth.
The amendments made by the senators to the original text show that there is a willingness to listen to different perspectives and make adjustments as necessary. This approach is important to ensure that the legislation addresses the needs and concerns of all stakeholders.
One of the key changes in the bill is the expansion of exceptions to the spending limit rule. This shows a recognition of the importance of investing in areas such as education, infrastructure, and innovation to drive economic development. By excluding certain expenses from the spending limit, the government can prioritize these sectors and ensure that they receive the necessary funding for growth and improvement.
Another significant aspect of the bill is the inclusion of mechanisms to adjust the spending limit based on inflation. This allows for flexibility and ensures that the government can adapt to changing economic conditions without compromising fiscal responsibility. By using accumulated inflation data, the government can make informed decisions about adjusting the spending limit to support economic recovery and stability.
It is also worth noting that the bill maintains the primary result goals and parameters defined by the deputies. This demonstrates a commitment to fiscal discipline and responsible budgeting. By setting clear targets for revenue and expenditure, the government can effectively plan and manage public resources, ensuring that they are used efficiently and effectively.
Overall, the new tax framework bill is a positive step towards improving Brazil’s fiscal policy. It provides clarity, stability, and flexibility, allowing for responsible spending and sustainable economic growth. By addressing key issues such as exceptions to the spending limit and inflation adjustments, the bill aims to create a favorable environment for investment, job creation, and economic development.
Summary:
The Federal Senate has approved the basic text of a new tax framework bill, introducing changes to the version that came out of the Chamber of Deputies. The bill expands exceptions to the spending limit rule, excluding expenses related to education, infrastructure, and innovation. The bill also incorporates mechanisms to adjust the spending limit based on inflation, allowing for flexibility in budget planning. The primary result goals and parameters defined by the deputies are maintained in the bill. The bill aims to provide clarity, stability, and flexibility to Brazil’s fiscal policy, promoting responsible spending and sustainable economic growth.
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The plenary session of the Federal Senate approved, this Wednesday (21), by 57 votes in favor and 17 against, the basic text of the complementary bill that deals with the new tax framework (PLP 93/2023).
The version approved by the senators brings changes in relation to the text that came out of the Chamber of Deputies. During the course of the matter in the legislative house, the rapporteur, Senator Omar Aziz (PSD-AM) accepted suggestions from colleagues to expand the list of exceptions to the rule that establishes a limit for the growth of public spending from one year to the next. anus. next − movement that had already been announced a few days ago.
By substitution, the following were left out of the new “ceiling”: 1) the expenses related to the Union’s complement to the Fund for the Maintenance and Development of Basic Education and for the Valuation of Education Professionals (Fundeb); 2) constitutional transfers from the Union to the Constitutional Fund of the Federal District (FCDF); and 3) spending on science, technology and innovation.
The three points were among the main suggestions for changes presented in the form of amendments by the members of the Economic Affairs Commission (CAE), where the matter was processed before being brought to plenary. The collegiate approved the text this morning by a large majority (19 votes against 6).
As there were merit changes, the complementary bill must return to the Chamber of Deputies for a new vote. The initiating chamber of the legislative process has the last word on the version that will be brought to President Luiz Inácio Lula da Silva (PT) for his approval.
Despite the modifications, the substitute approved by the senators maintained all the fiscal rules approved by the deputies and the parameters defined by the neighboring chamber, that is, the primary result goals and the real growth of expenses by 70% ( or 50% in case of default). of primary school) of the evolution of income, respecting the range of 0.6% and 2.5%.
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The amendments, however, slightly reduce the potential of the standard, but should not significantly change the specialized scenarios for public accounts.
Also read: “Exceptions” with Fundeb and FCDF have reduced impact, but weaken the rule, says XP
One of the points of uncertainty until the presentation of the report, the parameter to evaluate the inflation that will correct the spending limit, was maintained according to the version sent by the deputies. The discussion has relevant impacts on the 2024 Budget and subsequent years.
According to the rule issued by the Chamber of Deputies, the new “ceiling” is corrected for accumulated inflation in the 12 months up to June of the previous year to which the annual budget law refers, exactly as the spending ceiling worked before the change. done. during the government of Jair Bolsonaro (PL).
The text, however, says that the difference between inflation verified from January to December and that used as a parameter to define the spending limit can be used to increase the “ceiling” authorized to the government through the complementary credit.
The version approved by the deputies also authorizes that, exceptionally in 2024, these amounts are incorporated into the calculation basis of the spending limit for the following years.
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In addition, the text approved by the deputies allows the Executive Branch, after the second bimonthly settlement of income and expenses (which is carried out in May of the fiscal year), to increase the level of planned expenses, through complementary credit, in case of verifying a volume higher than projected in the Annual Budget Law (LOA).
In the evaluation of specialists, the two devices could give the government some “fat” to adjust the volume of expenses in 2024. But, as the inflation of 12 months that ended in June should be less than that verified in the accumulated of the year closed , calculations by the economic team indicate that the government must advance the LOA with an adjustment between R$ 32 billion and R$ 40 billion.
During the course of the matter in plenary, the rapporteur Omar Aziz accepted an amendment presented by Senator Randolfe Rodrigues (without party-AP), leader of the government in the National Congress. The device authorizes the government to use an estimate of the difference between the total inflation of the year and that calculated in the period considered for the correction of the “ceiling” of expenses to include the schedules of primary expenses. Said execution, however, would be conditioned to the approval by the National Congress of an additional credit bill with the extension of the individualized limit in question.
According to Randolfe, the change will avoid cuts of approximately R$ 32 billion in the PLOA − which, in his words, could affect “investments in highways, sanitation and embankment containment, in addition to current expenses such as passport issuance and INSS operation and assistance services for the most vulnerable population to access social benefits such as Bolsa Família, BPC, retirement and pension”.
“It should be remembered that the device does not extend the limit for primary spending of the LOA in relation to the text approved by the Chamber in PLP 93/2023. It only provides for, conditionally, expenses in the PLOA that would already be accredited later”, the parliamentarian maintained when justifying the amendment accepted by the plenary.
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