Bolsonaro sanctions permanent floor of BRL 400 from Aid Brazil

President Jair Bolsonaro (PL) sanctioned, on Wednesday (18), the provisional measure (MP) that makes permanent the floor of R$ 400 in the scope of Auxílio Brasil, a substitute program for Bolsa Família.

The text was published, without vetoes, in the Official Gazette of this Thursday (19).

The measure was symbolically approved by senators on May 4 and proceeded to sanction. The Chief Executive signed the text this afternoon, in a sanctioning ceremony with other bills on the third floor of the Planalto Palace. The ceremony was not on the president’s agenda.

According to the Planalto note, the cost of the program will be R$ 88.5 billion. Of these, R$ 47.5 billion were already spent initially on Auxílio Brasil.

The design of the temporary extraordinary benefit was adopted in December last year because the government needed a new permanent source of revenue to fund a significant increase in the value of the program, as required by the LRF (Law of Fiscal Responsibility). This source would be the taxation of profits and dividends, included in the proposal for the reform of the Income Tax, but the text ended up stalling in the Senate.​

Without the source of compensation, Bolsonaro edited an MP in December last year creating the extraordinary benefit until the end of 2022 – enough to get through the election year without violating the LRF.

Since the enactment of the measure, however, the government obtained in Congress the approval of the PEC (proposed amendment to the Constitution) of the Precatórios, which postponed the payment of federal judicial debts and relaxed the spending ceiling, the government’s fiscal anchor that limits the expenditure growth to the variation of inflation.

One of the provisions of the constitutional amendment enacted from the PEC authorizes the government to regulate, in 2022, the conditions, access rules and other requirements of the social program without the need to meet the legal limits for increased expenses —in practice, removing the LRF .

A legal opinion issued by the PGFN (Attorney General of the National Treasury), issued on December 28, indicates that this provision authorizes the government to make the amount of R$400 permanent without the need for a source of compensation.

The assessment is that the LRF already authorizes the creation of temporary expenses without the need for a permanent source of income. Therefore, according to a government source, the constitutional provision only makes sense if the interpretation is that it opens the way to expenses that have repercussions in other years, as long as they are aimed at fighting poverty.

In the economic team, the assessment is that, having a legal and legal basis, the benefit of R$ 400 already has a guaranteed space within the spending ceiling and is also already accounted for in the estimated fiscal targets for this and next year. That is, there is no budget constraint on the proposal.

Furthermore, politically, it was very unlikely that any government would reduce the value of the current R$400.

Despite this, the topic is controversial, and within the government itself there is no consensus. There are technicians who make a more restrictive interpretation of the rule, since it mentions the “increase in expenses in the referred year”, that is, the exemption would be valid only for this year.

Even technicians from the TCU (Union Court of Auditors) understand, in preliminary analyses, that the requirements of the LRF should be observed for the period from 2023 onwards.