Haddad evaluates package to reduce deficit in public accounts

The Minister of Finance, Fernando Haddad (PT), discussed with his team this Tuesday (3) a wide range of measures that increase revenue and reduce expenses, generating an impact of up to R$ 223 billion on public accounts.

It was the first official meeting between the new portfolio holder and his team of secretaries and legal advisors, at the body’s headquarters, in Brasília.

Interlocutors heard by Sheet point out that the initiatives listed by the team are scenarios that are on the table for discussion, but have not yet been the subject of a decision. The survey was carried out so that Haddad would have “an idea of ​​the range of possibilities”.

The list of measures on the revenue side includes the use of ICMS credits (R$ 30 billion), the reduction in the scope of exemption on fuels in comparison with last year (R$ 28.67 billion), the possibility of undoing the 35% cut in the rates of the IPI (Tax on Industrialized Products) adopted by the previous administration (R$ 9.01 billion) and the revocation of the PIS/Cofins cut on financial income from large companies (R$ 4.4 billion).

The list also mentions the reencumbrance of the IOF (Tax on Financial Operations), with an impact of R$ 0.47 billion, although it does not specify which portion of the tax. There is an observation that this measure is “under evaluation of merit” by the Revenue.

The Minister of Finance is under pressure to present an action plan to alleviate the gap of more than R$ 220 billion in public accounts foreseen for this year, aggravated by the PEC (proposed amendment to the Constitution) of Gastança, which authorized an increase of BRL 168 billion in expenses to guarantee the continuity of social programs and investments.

In his inauguration speech, on Monday (2), Haddad promised to reduce the deficit. “We will not accept a primary result that is not better than the absurd BRL 220 billion deficit foreseen in the Budget for 2023”, he said.

The minister has not yet released any concrete plan of measures, although he has expressed his intention to do so “in the coming weeks”. Haddad still needs the approval of President Luiz Inácio Lula da Silva (PT) to proceed with the measures. This Tuesday morning, in an interview with Brasil 247, the minister said that he intends to present Lula with a flight plan with short, medium and long-term actions for the economic agenda. According to him, the idea is to address the issue in his first dispatch with the president, expected to take place in the coming days.

In preparation for possible announcements in the future, the team discussed options that include reversing exemptions, seeking windfall revenue and reducing expenses. The list ended up being made public in one of the records of the meeting. The Ministry of Finance states that “it was a general working meeting, the first with the secretaries after the minister took office”.

The team also listed possible extraordinary revenue actions, as an “extraordinary incentive to reduce litigiousness in Carf”, in reference to the administrative court that judges tax conflicts. The potential is estimated at R$ 53.77 billion.

According to reports, the minister established as one of the priorities to improve the governance of Carf, which accumulates a growing stock of litigation and which already exceeds R$ 1.2 trillion. The perception is that Haddad should look for structural measures to speed up the analysis of processes.

Last year, the government of Jair Bolsonaro (PL) gave in to large companies, which wanted to overthrow the so-called casting vote, which assured the Federal Revenue Service of maintaining the tax collection in the event of a tie in the judgment – ​​something commonplace in a court formed by tax authorities and taxpayers’ representatives.

With no line of defense in the Legislative, the body lost the casting vote, amplifying the defeats of the Public Treasury. The possibility of resuming this differentiated power, however, is doubtful in the current government because it could open loopholes to legal questioning.

Still on the list of extraordinary revenues, another option is an “extraordinary incentive for spontaneous reporting”, estimated at BRL 33.77 billion, but not detailed in the presentation.

On the expenses side, Haddad’s team is betting on saving BRL 15 billion in resources with the review of contracts and programs —an agenda already pursued by the new minister when he was mayor of São Paulo, say interlocutors.

The possibility of allowing a lower execution of expenses than what was effectively authorized in the Budget was also mentioned — a kind of control at the cash register. The potential of this front was calculated at R$ 25 billion.

Finally, the technicians also pointed out the raising of BRL 23 billion in revenues from assets currently deposited in the PIS/Pasep Fund, which have been idle for decades without any complaints from their beneficiaries. The redemption of these resources by the government has already been authorized by Congress through the PEC approved at the end of 2022.

According to interlocutors, Haddad opened the meeting by saying that he needs money to improve public accounts and is committed to ensuring the Union’s fiscal solvency. He asked the team to prepare scenarios and possible action plans that could mitigate –or, in a much more optimistic scenario, even reverse– the projected primary deficit for this year. There is still no closed proposal.