Lower House speaker offers fiscal plan to avoid IOF tax hike

Mr. Motta warned that the country’s fiscal situation is making it “ungovernable” and pushed back on the possibility that the government might take the dispute to court: “That would only worsen the atmosphere here in the House,” he said.

Earlier on social media, Mr. Motta said the ten-day deadline had been agreed upon in a meeting the previous day with Finance Minister Fernando Haddad, Institutional Relations Minister Gleisi Hoffmann, and Senate President Davi Alcolumbre (Brazil Union Party). He emphasized that the government’s alternative plan must be “something lasting, consistent, and not just a fiscal patchwork aimed solely at increasing revenue and hurting the country.”

“I stressed the widespread dissatisfaction among deputies with the federal government’s plan to raise taxes. I also made clear that the mood here is to overturn the IOF decree in the House,” he wrote.

“We have been defending the need to review tax exemptions because Brazil cannot handle the sheer number of exemptions it has today. We need to discuss earmarked revenues and an administrative reform to bring more efficiency to the public sector. Only that will help improve the economic environment.”

On Wednesday night, after the meeting, Mr. Haddad said he had explained to Congress leaders that the IOF hike would be necessary in 2025 due to the difficulty of finding alternatives that could be implemented immediately—without the required 90-day or one-year waiting periods applied to other tax increases. However, he signaled openness to discussing long-term structural measures to replace the IOF hike starting in 2026.

In this context, Mr. Motta pledged to consider creating a working group to draft a proposal to review tax benefits.

When asked if there is now political momentum for revising tax breaks, Mr. Motta said only that this was his sense. Valor reported on Thursday that such tax expenditures could surpass R$800 billion in 2025.

The push to overturn the IOF hike through legislative decree gained momentum during the week, as the main parties from the Centrão bloc signaled their support.

In one of the most tense moments of the press conference, Mr. Motta was asked about government leaders’ remarks suggesting that parliamentary amendments could be blocked if the IOF increase is struck down. He criticized what he described as efforts to “demonize” the amendments and said Congress is fully aware that cutting the tax hike could trigger their suspension.