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Lower House speaker offers fiscal plan to avoid IOF tax hike

Ten-day deadline set as Congress leans toward overturning financial tax presidential decree

 

 

 

05/30/2025 

Amid threats from Congress to overturn the presidential decree raising the Financial Transactions Tax (IOF), Lower House Speaker Hugo Motta (Republicans Party) gave the federal government a ten-day deadline on Thursday (29) to present an alternative proposal. Mr. Motta called for the direct involvement of President Lula in the negotiations for long-term structural measures. Possible alternatives, he said, include passing an administrative reform, reviewing tax exemptions, and reassessing the earmarking of government revenues.

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.

Mr. Motta also said that taxing betting platforms—an idea backed by some sectors of the government—“is among the alternatives” being considered to create fiscal space, although he gave no further details on how this would be implemented.

*By Murillo Camarotto, Valor — Brasília

Source: Valor International

https://valorinternational.globo.com

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Lower House to debate changes in state representation in Congress

If the measure moves forward in Congress, seven state caucuses would gain seats, while seven others would lose

10/14/2024

Caroline de Toni — Foto: Vinicius Loures/Câmara dos Deputados
Caroline de Toni — Photo: Vinicius Loures/Câmara dos Deputados

Following the progression of measures aimed at curbing the powers of the Supreme Court and the anticipated approval of a bill granting amnesty to participants in January’s coup-mongering acts, the Lower House’s Constitution and Justice Committee (CCJ) has a new controversial topic on its agenda. The committee is considering a proposal to adjust the size of congressional caucuses based on the 2022 Census results.

If the proposal advances in Congress, seven state caucuses would increase in size, while another seven would see a reduction in their number of seats.

Speaking to Valor, CCJ Chair Caroline de Toni said the topic will be a priority for the committee in the coming months to prevent the Electoral Court from intervening due to legislative inaction. “It will be our priority. If we don’t regulate it, the TSE [Superior Electoral Court] will,” Ms. de Toni said.

In the proposed new composition of the Lower House, Santa Catarina, the state of the CCJ chair, and Pará would each gain four seats, bringing their totals to 20 and 21, respectively. Meanwhile, the caucus from Amazonas would increase to 10 from 8 legislators, and Ceará, Goiás, Minas Gerais, and Mato Grosso would each gain one additional lawmaker.

Conversely, Rio de Janeiro would lose four seats, dropping to 42 from 46, while the caucuses from Bahia, Paraíba, Piauí, and Rio Grande do Sul would each lose two seats. Alagoas and Pernambuco would each elect one fewer legislator.

Alagoas is the state of the current Lower House speaker, Arthur Lira. Bahia and Paraíba are home to the three main contenders to succeed Mr. Lira in 2025: Hugo Motta (Paraíba), Elmar Nascimento (Bahia), and Antonio Brito (Bahia), leaders of the Republicans, Brazil Union, and the Social Democratic Party (PSD) in the House, respectively.

Thirteen other states—Acre, Amapá, Federal District, Espírito Santo, Maranhão, Mato Grosso do Sul, Paraná, Rio Grande do Norte, Rondônia, Roraima, Sergipe, São Paulo, and Tocantins—would retain their current caucus sizes.

If the proposal progresses through both the Lower House and Senate, the new configuration will take effect starting in 2027, directly impacting the 2026 elections.

No adjustments have been made since 1993, and the Supreme Court has given Congress a deadline to redistribute seats.

The Constitution stipulates that each state must have between 8 and 70 congresspeople, based on its population size. The last adjustment was made in 1993.

The proposal also suggests that in the year preceding each election, the number of seats should be automatically adjusted according to the latest population data.

In August last year, the Supreme Court unanimously voted to require Congress to redistribute the seats each state holds in the Lower House by June 30, 2025. In his opinion, Justice Luiz Fux outlined that the Lower House should consider the maximum number of legislators, currently 513, along with the latest Census data.

The Court also decided that if Congress fails to pass the supplementary law by the stipulated deadline, the Superior Electoral Court (TSE) must determine the number of legislators for each state and the Federal District by October 1, 2025.

During a public hearing requested by rapporteur Danilo Forte, participants highlighted the necessity of revisiting the seat distribution but also noted potential challenges, such as the conflict between states losing and gaining seats, the lack of public support for increasing the overall number of legislators, and the need for compliance with constitutional principles in the distribution.

At the close of the hearing, Mr. Forte emphasized the need for the legislature to act decisively. “I urge [the congresspeople] to help me devise a solution to this issue before the TSE steps in for us.”

*By Marcelo Ribeiro, Raphael Di Cunto — Brasília

Source: Valor International

https://valorinternational.globo.com/
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