{"id":96114,"date":"2025-10-09T18:46:21","date_gmt":"2025-10-09T21:46:21","guid":{"rendered":"https:\/\/murray.adv.br\/?p=96114"},"modified":"2025-10-09T18:46:21","modified_gmt":"2025-10-09T21:46:21","slug":"congress-kills-financial-tax-bill-amid-early-2026-election-clash","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/congress-kills-financial-tax-bill-amid-early-2026-election-clash\/","title":{"rendered":"Congress kills financial tax bill amid early 2026 election clash"},"content":{"rendered":"
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Government accuses S\u00e3o Paulo governor of pushing centrist parties to block measure; lawmakers remove it from agenda<\/strong><\/em><\/h6>\n<\/div>\n<\/div>\n
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10\/09\/2025<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n

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Just a week after a major win with the approval of the income tax reform, the Brazilian government suffered a significant setback in Congress on Wednesday (9) as lawmakers rejected a provisional presidential decree that sought to tax financial investments and tighten spending.<\/p>\n<\/div>\n

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Throughout the day, leaders from the powerful centrist bloc known as the Centr\u00e3o\u2014including state governors\u2014mobilized to rally opposition to the bill, which the government had expected would raise R$31.5 billion in revenue and generate R$15 billion in savings by 2026. The presidential palace attempted to mount a response but was ultimately defeated in an unusual manner.<\/p>\n<\/div>\n

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The measure was effectively shelved when the Lower House passed, by 251 votes to 193, a motion to remove the bill from the agenda. This type of procedural motion is voted on before discussion of the bill\u2019s content and, if approved, delays the vote. Because the provisional decree was set to expire on Wednesday, it was permanently dropped.<\/p>\n<\/div>\n

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President Luiz In\u00e1cio Lula da Silva reacted on social media, arguing that the measure aimed to correct tax distortions. \u201cBlocking this correction is a vote against balanced public finances and tax fairness. What\u2019s behind this decision is a bet that Brazil will collect less revenue to restrict public policies and social programs that benefit millions. It\u2019s a move against Brazil,\u201d he wrote.<\/p>\n<\/div>\n

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The likelihood of defeat had become clearer the day before, when Congressman Carlos Zarattini of the Workers\u2019 Party (S\u00e3o Paulo)\u00a0struggled to get his report approved by a joint congressional committee<\/a>. After intense negotiations and revisions, which cost the government an estimated R$3 billion in revenue, the report was approved by just one vote. Citing the razor-thin result, Mr. Zarattini accused centrist parties of breaking a deal, singling out the Republicans, Brazil Union, the Progressive Party (PP), and the agribusiness caucus for voting against the bill.<\/p>\n<\/div>\n

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House Speaker Hugo Motta (Republicans Party, Para\u00edba) tried to broker an agreement to pass the measure, but ran into resistance from key centrist leaders. The figure most strongly accused of working against the measure was S\u00e3o Paulo Governor Tarc\u00edsio de Freitas (Republicans), who denied any involvement.<\/p>\n<\/div>\n

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\u201cWe felt very strongly the interference, purely political and electoral, of the S\u00e3o Paulo governor, who mobilized party presidents to change their stance on the provisional decree. Those of us who work for the best solution in each case and for meeting fiscal targets regret that a governor would use his position solely to prepare for an election campaign,\u201d Mr. Zarattini said on the House floor.<\/p>\n<\/div>\n

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Following\u00a0controversy over the \u201cshielding bill\u201d<\/a>, the\u00a0Centr\u00e3o<\/em>\u00a0and opposition lawmakers resumed strong anti-tax rhetoric to justify their rejection of the measure. Despite holding federal cabinet positions, parties like Brazil Union, the Progressive, and the Republicans ordered their members to vote against the bill. The Social Democratic Party (PSD), which had considered letting lawmakers vote freely, also instructed its members to oppose it.<\/p>\n<\/div>\n

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Facing this unfavorable scenario, President Lula called a lunch meeting with leaders from the government\u2019s congressional base, joined by Finance Minister Fernando Haddad and Institutional Relations Minister Gleisi Hoffmann. After the meeting, the government\u2019s leader in the Lower House, Jos\u00e9 Guimar\u00e3es (Workers\u2019 Party, Cear\u00e1), said the administration might issue new decrees to make up for the revenue lost from the bill\u2019s defeat.<\/p>\n<\/div>\n

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Mr. Lula urged Congress to show \u201cmaturity\u201d and criticized the use of the provisional decree for electoral purposes, in a clear jab at Mr. de Freitas. \u201cIf someone wants to turn this into an election issue, I can only say that it shows a staggering level of pettiness. Anyone can claim the proposal as their own. Any lawmaker can take credit for having voted in favor,\u201d the president said.<\/p>\n<\/div>\n

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Mr. de Freitas denied the accusation in comments to Valor. \u201cI don\u2019t interfere in these matters. We\u2019re very focused on a number of issues here [in S\u00e3o Paulo],\u201d he said.<\/p>\n<\/div>\n

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In an effort to rally support, the government temporarily removed three ministers from their posts so they could vote in the Chamber: Tourism Minister Celso Sabino (Brazil Union, Par\u00e1), Sports Minister Andr\u00e9 Fufuca (Progressive Party, Maranh\u00e3o), and Ports and Airports Minister Silvio Costa Filho (Republicans, Pernambuco). Ms. Hoffmann also sent messages to the Centr\u00e3o parties controlling those ministries.<\/p>\n<\/div>\n

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\u201cIf this bill fails, it will reveal a lack of public spirit [among lawmakers]. I appeal to all parliamentarians to walk with us in Congress today because this country is on the path to building social justice,\u201d Ms. Hoffmann said.<\/p>\n<\/div>\n

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Another strategy was to draw a comparison to the recent approval of the \u201cshielding amendment,\u201d when centrist parties and pro-Bolsonaro opposition lawmakers joined forces in a vote. The idea was to pressure opponents by labeling them as \u201cenemies of the people,\u201d but the tactic failed. Even after voting down the measure, most\u00a0Centr\u00e3o<\/em>\u00a0leaders refrained from making speeches, limiting themselves to brief, generic instructions.<\/p>\n<\/div>\n

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Only Liberal Party leader S\u00f3stenes Cavalcante (Rio de Janeiro) spoke forcefully. He congratulated the presidents of the main Centr\u00e3o parties individually for voting against the bill. He said the move \u201cshows, contrary to what many thought, that the center-right will be united in 2026\u201d around whoever former President Jair Bolsonaro chooses to face Mr. Lula.<\/p>\n<\/div>\n

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Tensions between the executive branch and Congress had already been mounting before the measure was introduced. President Lula issued it in June after lawmakers overturned a presidential decree setting new rates for the IOF (Tax on Financial Transactions). The original goal was to offset the revenue loss caused by that repeal.<\/p>\n

*By\u00a0Murillo Camarotto,\u00a0Giordanna Neves,\u00a0Beatriz Roscoe\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<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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