Fiscal remuneration may discourage achievement of the goal in the electoral year, says economist

As expected, the government’s proposal for the new tax revenue that will have to control public spending may end up leaving gaps so that the rulers do not respect the economic goals stipulated in the last year of their term, when the elections take place, and end up spending more than or expected.

The consideration is Murilo Viana, an economist specialized in public accounting. This could happen, in view of him, because the penalties foreseen for the government, if it fails to meet the spending goals in the current year, will only be for the following year.

“Imagine how I can not sign isso at the end of the term?”, asked Viana. “At the end of the mandate, everyone has to spend more, but on account it will not be for him, it is for those who will pay the government the following year. The new president will be forced to make an adjustment due to the increase in expenses from the previous one.”

how will it work

The bill presented by the Minister of Finance, Fernando Haddad, stipulates a growth limit for public spending and, in parallel, also a primary result goal that must be achieved by the government.

Expenses could grow up to 70% from how much they increased in the previous year, considering increases above inflation.

If, for example, tax revenues grow 3% in 2023, the government will be able to increase spending by 70% in 2024, or say, 2.1%.

Yes, the goal for the primary result must be defined year by year. It is stipulated in proportion to the GDP and always foresees a tolerance band, which will be 0.25 point for more or less.

The primary result is the balance of the public accounts between all or that govern collected and all or that spends, disregarding the expenses with juries of the dividend, that have their own sources of financing.

A surplus goal, or a positive balance goal, is a way to oblige the government to save money, spending less than what it takes and having a surplus of natural resources for the year.

There is also a deficit goal, negative, that imposes a limit on how much the government can spend at the amount it receives, therefore, how much it can be divided.

For 2025, for example, Haddad deixou stipulated a surplus goal that should be or equivalent to 0.5% of GDP. With the tolerance bands, this means that the economy to be made by the national government of the year must be less than 0.25% and not a maximum of 0.75% of GDP.

In case the government delivers a balance in account greater than 0.75% of GDP, all or excess value to that upper band must be destined for investments.

If, on the other hand, you deliver a balance less than the 0.25% minimum required, the repayment foresees a penalty: instead of being able to increase the expenses, not the following year, at 70% of the increase in receipts, this tax of readjustment may not exceed 50%.

If, for example, a revenue grew 3%, instead of 70% lower – 2.1% -, the expenses of the subsequent year could be readjusted at 50% of this increase, or still, at 1.5%.

He opened the accounts, according to Murilo Viana, who, in the case of a last year of office, will only qualify for the successor government, not the following year.

As the primary result is the difference between what the government spends and what is charged, there are two main paths that can lead to having a lower balance than what is required: this will happen if the tax increases less than what was planned or if it was spend more than the arrecada value gives account to collect.

The arrecadação considers the government revenues with taxes, royalties and dividends, for example.

new fiscal rule

Haddad, the Minister of Planning, Simone Tebet, and his main secretary will present to the public, at the fifth fair (30), their proposals for the new fiscal tax base.

It must replace the current budget of expenses and aim to discipline or increase two government expenses and, in the last instance, an uncontrolled increase in public life.

The complete project and the details of how it will work, in agreement with the ministers, must be redistributed by the economic team in the next few days, so that they can begin to process and be voted in the National Congress.