The Brazilian government's proposed increase to the Financial Operations Tax (IOF) has sparked a debate in Congress regarding alternative measures to balance public finances.
The discussion, led by Finance Minister Fernando Haddad, includes exploring cuts in tax exemptions and potential changes to social programs to avoid the IOF increase, which has faced opposition from businesses and lawmakers.
The government needs to secure R$20.5 billion to cover expenses, leading to the IOF hike on credit operations, foreign exchange, and private pension contributions. The Congress is now considering measures to address the fiscal situation, including potentially addressing tax privileges and social program adjustments.
Alternatives being considered include cutting privileges for certain categories, economic sectors, or companies. These could involve changes to military retirement rules and stricter regulations on public sector salaries. However, there is resistance to these measures.
Economists and analysts express concerns about potential cuts to social programs, such as the Basic Education Development and Maintenance Fund (Fundeb) and the Continuous Benefit (BPC). Some suggest revising fiscal targets and altering fiscal framework rules as alternative solutions.