Tax benefit ends officially on December 31, but President Bolsonaro has already signaled he would seek its extension

08/30/2022

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Jair Bolsonaro — Foto: Cristiano Mariz/Agência O Globo

The fuel tax relief, a trump card of President Jair Bolsonaro’s (PL) in the election campaign, is expected to be maintained next year. The tax benefit ends officially on December 31, but the president has already signaled that he would seek its extension.

The 2023 budget bill, which will be sent to Congress by Wednesday, provides for tax breaks of R$50 billion due to the fuel tax relief, officials say, including R$18 billion for diesel alone.

Another important campaign promise, however, will not be included in the budget bill. According to the budget blueprint, Auxílio Brasil, the social program created to replace Bolsa Família, will only distribute R$400 a month, compared with R$600 now. A legal provision – that currently does not exist – is needed to keep the current value next year, as promised by President Bolsonaro, who is running for re-election, and some of his opponents, including former President Luiz Inácio Lula da Silva (Workers’ Party, PT) and Senator Simone Tebet (Brazilian Democratic Movement, MDB).

Mr. Bolsonaro will include the forecast of paying R$600 in 2023 in the message that accompanies the budget bill to Congress. The idea faced some resistance from officials because it is not a usual step. However, it was the way found to reinforce the promise. In the debate held by a pool of news outlets led by TV network Band, Mr. Lula da Silva criticized him for failing to include the higher Auxílio Brasil cash transfers in the 2023 budget bill.

In campaign advertising, the president has said that the aid will be paid in line with “fiscal responsibility” principles. Behind the scenes, Economy Minister Paulo Guedes has advocated that the source of funding for the additional expense of R$50 billion to R$60 billion should be the collection of individual income tax on dividends. Government estimates suggest that the collection would be similar to that.

This taxation is part of a bill in Congress, which has already been passed by the Chamber of Deputies but faced resistance from senators. During the debate on Sunday, Mr. Bolsonaro said he would seek the means to raise and finance the aid in dialogue with Congress after the elections.

The adjustment of the income tax rates, a promise of Mr. Bolsonaro’s 2018 campaign, is not expected to be included in the budget bill, sources say. One reason is the requirement of an alternative source of revenue.

The budget bill is likely to include R$10.5 billion to adjust the salaries of civil servants next year.

Although the federal accounts tend to end the year in the black, the budget bill is likely to project a R$65 billion deficit.

As Valor reported last week, R$430 billion would be needed to foot all the promises speculated that require spending and tax breaks next year. Officials specializing in the budget, both from the Executive and the Legislative branches, expect the 2023 budget bill to be modified after the elections, in October.

*By Lu Aiko Otta — Brasília

Source: Valor International

https://valorinternational.globo.com/