{"id":94719,"date":"2025-06-29T17:14:17","date_gmt":"2025-06-29T20:14:17","guid":{"rendered":"https:\/\/murray.adv.br\/?p=94719"},"modified":"2025-06-29T17:14:17","modified_gmt":"2025-06-29T20:14:17","slug":"political-rift-in-brasilia-stalls-income-reform-plan","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/political-rift-in-brasilia-stalls-income-reform-plan\/","title":{"rendered":"Political rift in Bras\u00edlia stalls income reform plan"},"content":{"rendered":"
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Bill\u2019s rapporteur Arthur Lira delays report on income tax exemption for low earners as lawmakers push back on government\u2019s compensation plan<\/strong><\/em><\/h6>\n<\/div>\n<\/div>\n
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06\/29\/2025 <\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n

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The\u00a0growing rift<\/a>\u00a0between Brazil\u2019s executive and legislative branches following the repeal of a presidential decree to raise the Financial Transactions Tax (IOF) is now threatening other government priorities in Congress. One casualty is the income tax reform bill that would raise the exemption threshold to R$5,000 per month. The bill\u2019s rapporteur, Congressman Arthur Lira (Progressive Party, PP), is expected to postpone the release of his report, which had been scheduled for this Friday (June 27).<\/p>\n<\/div>\n

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At the same time, lawmakers anticipate pushback against the provisional presidential decree (MP) introduced to offset lost revenue from the scrapped IOF hike.<\/p>\n<\/div>\n

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Regarding the income tax proposal, legislators now believe the timing is not right and that tensions need to subside. However, the goal is still to present the report before the legislative recess, which begins on July 18.<\/p>\n<\/div>\n

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Relations between the government and Congress have soured, with lawmakers increasingly voicing frustration over revenue-raising measures and new taxes. There is a growing narrative within the legislature of \u201cfatigue\u201d with policies perceived as tax-heavy.<\/p>\n<\/div>\n

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Mr. Lira has been searching for ways to offset the fiscal loss from expanding the tax exemption. The Finance Ministry\u2019s original proposal includes taxing dividends and high-income earners to compensate for the new exemption ceiling. Mr. Lira\u2019s focus in the upcoming report will be on evaluating and negotiating this compensation.<\/p>\n<\/div>\n

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Searching for support<\/strong><\/p>\n<\/div>\n

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The executive branch is also pushing for an alternative MP to replace the IOF hike. Despite the friction, the government believes it is still possible to reach a consensus in Congress. As Valor reported on Wednesday, the economic team has already been warned that there are not enough votes to pass the proposal in its current form.<\/p>\n<\/div>\n

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The MP includes, among other provisions, an increase in withholding tax on Interest on Net Equity payments distributed by companies to shareholders and changes to tax-incentivized private securities.<\/p>\n<\/div>\n

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Talks are unfolding during a low point in the relationship between the government and Congress. Following the IOF repeal, officials in the presidential palace believe that Lower House Speaker Hugo Motta (Republicans Party) broke a promise to ensure predictability in the legislative agenda. They say that commitment was a key reason behind the government\u2019s support for Mr. Motta\u2019s appointment to the leadership of the Lower House. Sources admit that the relationship with Mr. Motta has deteriorated, but caution that the government must act \u201ccalmly.\u201d<\/p>\n<\/div>\n

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According to President Lula da Silva\u2019s aides, Mr. Motta\u2019s move was politically calculated\u2014an attempt to secure a base of support in Congress similar to what Mr. Lira had built. They believe Mr. Motta is also laying the groundwork for a broader political strategy in the run-up to the 2026 elections, amid Mr. Lula\u2019s declining approval ratings. Mr. Motta did not respond to requests for comment.<\/p>\n<\/div>\n

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Speaker Motta\u2019s allies argue there was no \u201csurprise\u201d in putting the IOF repeal to a vote, as it reflected the majority sentiment in the chamber. They said this position was made clear in a meeting with Institutional Relations Minister Gleisi Hoffmann.<\/p>\n<\/div>\n

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Following the defeat, Mr. Lula addressed the public on social media, saying, \u201cA lot of people have been talking about taxes in Brazil in recent days,\u201d and that it\u2019s \u201cimportant to understand what\u2019s actually being proposed.\u201d He added, \u201cThe government wants to make changes that target privileges and injustices. To make the system fairer.\u201d<\/p>\n<\/div>\n

*By\u00a0Beatriz Roscoe,\u00a0Murillo Camarotto,\u00a0Sofia Aguiar\u00a0\u00a0and\u00a0Renan Truffi, Valor\u00a0\u2014 Bras\u00edlia<\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com\/<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Bill\u2019s rapporteur Arthur Lira delays report on income tax exemption for low earners as lawmakers push back on government\u2019s compensation plan       06\/29\/2025 The\u00a0growing rift\u00a0between Brazil\u2019s executive and legislative branches following the repeal of a presidential decree to raise the Financial Transactions Tax (IOF) is now threatening other government priorities in Congress. 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