State of emergency: why is the PEC that releases spending in an election year so controversial?

The Senate will start voting this Wednesday (29/06) on a PEC (Proposal for a Constitutional Amendment) which, among other things, provides for the payment of a R$ 1,000 voucher to self-employed truck drivers and the expansion of benefits such as gas and Aid Brazil.

The measure has an expected impact of R$ 38.75 billion in addition to the government spending ceiling and reaches Congress surrounded by controversy.

As it is an election year, electoral legislation prohibits the creation of new social benefits such as the planned “voucher” for truck drivers. The PEC, however, provides for the recognition of a supposed “state of emergency” caused by the increase in fuel prices.

Specialists heard by BBC News Brasil say that the recognition of the state of emergency is a way to avoid the prohibition provided for in the electoral law.

The PEC goes to the vote just over three months before the presidential elections and at a time when President Jair Bolsonaro (PL) appears in second place in the main polls of voting intentions, behind former president Luiz Inácio Lula da Silva ( PT).

According to a survey by the Datafolha Institute released in March this year, 68% of people interviewed blame Bolsonaro for the rise in the price of fuels such as gasoline, diesel and cooking gas.

To enter into force, the PEC needs to be approved in two rounds by both the Senate and the Chamber of Deputies and have three-fifths of the votes of parliamentarians in both houses. After approval, it is enacted automatically, without the need for presidential sanction.

The text that is going to be voted on this week provides for the creation of a new benefit and the expansion of four others. The new benefit is a voucher of BRL 1,000 to be paid monthly to self-employed truck drivers between July and December 2022. The impact on the budget would be BRL 5.4 billion.

The measure also provides for an increase of R$ 200 in the amount paid for Auxílio Brasil, which currently stands at R$ 400, in addition to the registration of 1.6 million families who are on the waiting list for the benefit. The cost of the measure is R$ 26 billion.

The PEC also determines an increase of R$ 53 in the value of the gas allowance, currently at R$ 112.60. The cost of this expansion is R$ 1.05 billion.

The proposal also provides for the payment of a subsidy to guarantee the free use of public transport for the elderly, in an estimated increase in expenses of R$ 2.5 billion.

The PEC also determines a transfer in the amount of R$ 3.8 billion in tax credits to maintain the competitiveness of ethanol, used in the blend of gasoline sold at gas stations in Brazil.

In the PEC report sent to the Senate, the rapporteur of the matter, Fernando Bezerra (MDB-PE), says that it is necessary to recognize the country’s emergency situation because Law No. benefits in years in which elections are held.

“In the year in which the election is held, the free distribution of goods, values ​​or benefits by the Public Administration is prohibited, except in cases of public calamity, state of emergency or social programs authorized by law”, reads an excerpt from the law.

Fernando Bezerra’s report touches precisely on this point. To justify the supposed need to recognize the state of emergency, the senator cites the increase in fuel prices. In the document, there is even mention of the war in Ukraine, which began in February.

“Firstly, it is essential to recognize that the country is going through an emergency situation caused by the sharp increase in fuel prices, with its direct impacts on the cost of living, and indirect, via second-order effects on inflation”, he says. an excerpt from the report delivered by the senator.

In another passage, the parliamentarian makes clear the importance of recognizing the state of emergency for the government’s strategy.

“The recognition of the state of emergency is important to give the necessary legal support to different public policies, focused on the most vulnerable”, says an excerpt from the report.

‘Dribbling’ in legislation

For economist and executive director of the Independent Fiscal Institution (IFI), Daniel Couri, the practical effect of recognizing the state of emergency is the legal possibility for the government to create benefits and increase spending in an election year.

“Recognition of the emergency would give the government the legal support it needs to avoid being punished by electoral legislation,” Couri told BBC News Brasil.

In the opinion of Rodrigo Leite, professor of Finance and Management Control at the Institute of Graduate Studies and Research in Administration (COPPEAD) of the Federal University of Rio de Janeiro (UFRJ), the recognition of the state of emergency provided for in the so-called PEC for Fuels is a kind of “dribble” in electoral legislation, in the Fiscal Responsibility Law (LRF) and in the spending ceiling.

This would happen because the emergency situation would provide legal support for the government to create benefits or increase spending during the election period. “The Electoral Law prohibits governments from creating benefits in an election year to prevent government officials from having an advantage over other candidates. But with the recognition of the state of emergency, the government gains a kind of free pass to spend,” said the professor. .

According to him, the justification used in the PEC to ask for the recognition of the state of emergency is not plausible.

“It makes no sense to claim that the increase in fuel prices creates an emergency in Brazil because this is not a situation that should change in the short term. The government wants to implement a short-term remedy for a situation that will not be resolved in the short or medium term. deadlines”, said the professor.

Leite also stated that the budgetary impact of the PEC should complicate the conduct of the country regardless of who wins the elections.

“It will generate a deficit of R$ 38 billion. And there was already a forecast of a previous deficit that was around R$ 40 billion. It is not something that the next administration will be able to solve in its first years”, said Rodrigo Leite.

This text was originally published here.