Rui Costa says removal of compensatory measures could impact funding for schools and hospitals
08/27/2025
The president’s Chief of Staff, Rui Costa, warned on Wednesday (27) that removing compensatory measures from the government’s income tax reform proposal could undermine public services such as schools and hospitals. Speaking about congressional negotiations, he argued that sometimes “irrational strategies to damage the federal administration prevail.”
Mr. Costa’s remarks refer to behind-the-scenes maneuvering by opposition lawmakers to strip out provisions that would help offset revenue losses from expanding the income tax exemption to those earning up to R$5,000 per month. The government’s bill includes a 10% tax on high-income earners. Without that provision, new measures would be needed to cover the fiscal cost of the expanded exemption.
While Mr. Costa said it would be difficult for Congress to reject the overall project, he admitted compensatory measures could be removed. “That would create difficulties in keeping schools and hospitals running, because any government in the world needs resources to provide public services,” he said during a live interview on the program Bom Dia, Ministro.
The Lula administration is pushing for a vote on the reform this week, fearing that former president Jair Bolsonaro’s trial at the Supreme Court—scheduled to begin September 2—could heighten political tensions and delay the agenda.
As reported by Valor, lawmakers see the release and payment of congressional earmarks as key to smoothing approval in the lower house, though resistance remains. A faction of Brazil Union, for example, is lobbying to strike the 10% high-income tax. Meanwhile, Mr. Bolsonaro’s Liberal Party (PL) is pressing for the exemption threshold to be raised further, to R$10,000.
Mr. Costa also addressed President Luiz Inácio Lula da Silva’s recent appeal for ministerial loyalty, delivered Tuesday (26) during a cabinet meeting at the Planalto Palace. Mr. Lula told ministers they may attend partisan events but must consistently defend the government, especially in opposition forums.
Defending Mr. Lula’s stance, Mr. Costa argued that members of the governing bloc need discipline: “Otherwise you hold ministries, but end up voting against the government,” he said. “If you’re in the government, you must defend not Lula personally, but the administration.”
According to Mr. Costa, ministers should respond directly to criticism. “If a person doesn’t defend their own work, it becomes hard for the public to understand,” he said.
Sources told Valor that Mr. Lula avoided singling out ministers or parties during Tuesday’s meeting, but he cited a recent example: the federation event formalizing ties between Brazil Union and the Progressives Party (PP). During the event, PP leader Ciro Nogueira criticized the government, yet, Mr. Lula complained, “not one minister raised a hand to defend” the administration.
The episode highlights mounting friction between the government and its coalition partners. Together, Brazil Union and the PP control four ministries but have increasingly clashed with the president.
Adding to the tension, Mr. Lula also mentioned Brazil Union president Antonio Rueda, reportedly saying he disliked Mr. Rueda and that the feeling was mutual. The remarks followed weeks of unease after Mr. Rueda publicly criticized the government’s handling of tariff negotiations with the United States.
*By Sofia Aguiar, Valor — Brasília
Source: Valor international
https://valorinternational.globo.com