Elected government may include commitment to new fiscal anchor in PEC, says PT leader

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The transition team may include in the PEC that removes Bolsa Família from the spending cap the commitment to propose a new fiscal anchor for the country to be determined via a complementary bill, said PT leader in the Chamber, Reginaldo Lopes (PT- MG), this Friday (16).

According to the PT leader, the management of president-elect Luiz Inácio Lula da Silva is not only in favor of a new fiscal anchor in place of the spending cap, but is also willing to review tax exemptions.

“If this is an important sign, modernizing the country’s fiscal rules, perhaps it could even signal this in the PEC, the government would send a new fiscal anchor”, said the deputy to Reuters.

The draft of the so-called Transition PEC presented by vice-president-elect Geraldo Alckmin to Congress on Wednesday (16) does not provide for any type of fiscal anchor, but as it is a draft, it can still be changed to facilitate its processing.

“We have to guarantee the resumption of economic growth, the elimination of hunger and extreme poverty, and also economic stability. We are going to do whatever helps fiscal stability, economic stability,” guaranteed Lopes.

“Let’s modernize, let’s move forward. Or else, even signal, for example, that we assume the commitment to revisit tax waivers, PIS, Cofins, IPI, make a more digital government, review contracts, because the country with the 2023 Budget sent by Bolsonaro.”

In the draft of the PEC (Proposed Amendment to the Constitution) delivered to Congress, the elected government proposed to “exceptionalize” from the R$ 175 billion spending ceiling for the payment of Bolsa Família from 2023 in the amount of R$ 600, with an additional BRL 150 per child, without a fixed period, and even an authorization for part of the extraordinary income to remain outside the cap and be redirected to investments, with a limit of BRL 23 billion next year.

This space referring to extraordinary income, according to the draft, could already be opened in 2022, confirmed the leader, who does not rule out the possibility of negotiating this point.

The financial market had a day marked by tension on Thursday (17th), with the stock market falling and the dollar rising, after the announcement of the elected government’s proposal.

The possible inclusion of a commitment to fiscal anchoring in the PEC would allow the Lula government to send a complementary bill to Congress in the future, which would require a less demanding voting quorum than that required for the PEC itself.

The PEC needs the approval of three-fifths of the deputies and senators in two rounds of voting in each of the plenary sessions, with a much longer procedure. In the case of the supplementary bill, an absolute majority of votes in the plenary sessions of the House and Senate would be required.

Lula is a frequent critic of the spending ceiling — created during the Michel Temer government to control public spending — and even during the election campaign he warned that he would change the fiscal anchor.

Earlier, in an interview with GloboNews, Lopes defended that Bolsa Família, as it is an income transfer program, should not be bound by any fiscal rule as a matter of principle.

Fiscal Responsibility Law

The PT leader also defended the revision of the LRF (Fiscal Responsibility Law) so that the rule includes, in addition to fiscal targets, concepts such as targets for eliminating poverty in the country.

“A new fiscal anchor is in order, but also a review of the Fiscal Responsibility Law with 10-year goals for eliminating inequality, poverty and goals for education,” he said.

The LRF came into effect in 2000, during the government of then-president Fernando Henrique Cardoso, with the aim of establishing limits on public spending, including personnel costs.

In the case of exemptions, members of the transition team and Lula’s allies have already indicated their intention to reassess them.

The acting president of the TCU (Tribunal de Contas da União), Bruno Dantas, said that the new government should inherit around 400 billion reais in tax exemptions and warned that there could be a risk of fraud and abuse of economic power in these concessions.

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