In an interview with Jornal da Manha, of Jovem Pan News, the former finance minister stated that Haddad “disavows himself” in his promise not to promote tax increases
After months of anticipation, the Minister of Finance, Fernando aloneD, announced the government’s new fiscal framework on Thursday, 30. The fiscal rule aims to eliminate the public deficit in 2024 and increase GDP by 1% by 2026. Increase public spending limited to 70% of the change. in primary revenue over the last 12 months. To talk about the proposal, Jornal da Manha, of Jovem Pan News, interviewed former Finance Minister Melson da Nóbrega. For the economist, although spending limits are positive, the new anchor brought the expectation of an increase in the tax burden: “It has a positive side, which is the establishment of an expenditure limit. What was imagined days and months ago was that there would be an appropriation of debt as an anchor, this would be a fulcrum Very fragile because debt can rise due to factors beyond the control and discretion of the government.
“Basically, it is a ceiling. But it is a very flexible ceiling compared to what is currently in place. In the case of the current ceiling, which will disappear shortly after the approval of the Fiscal Framework Law, spending can only grow due to inflation variation. Now it can grow.” Expenditure to 70% of the revenue increase. Which means that this fiscal framework creates an incentive to seek to increase revenue. The higher the revenue, the greater the spending capacity of the federal government. There is another problem there. Although the Minister of Finance denied that there was an increase in the tax burden, it is Likely to deny himself, because at some point there will be an increase in the tax burden. He himself recently announced that after the two primary entities (PECs) agree on the consumption tax reform, the income tax reform proposal will come. This will most likely include the taxation of dividends, which means increasing the tax burden,” he said.
The former finance minister also criticized the lack of measures to free up space in the budget, with what could be the maintenance of so-called “budget rigidities,” in which 93% to 95% of federal expenditures are compulsorily allocated to areas such as Social Security, education, health, and certain social programs. , as Bolsa Família: “At some point, the government has to build political capital to attack mandatory spending. Without attacking mandatory spending, there is no future for the Brazilian economy. You cannot have a country in which the federal government has only 5% of the budget to implement development policies, reducing inequality etc. In the world, this average is 50%, i.e. governments have half of the budget to carry out these functions.”
On the other hand, expenditures were re-linked to education and health. As a general rule, the increase in expenses can only occur up to 70% of the increase in revenue. As for education and health, it is 100%. (…) In general, these are factors, and since the mandatory spending rules remain the same, it seems unlikely that Brazil will be a candidate to recover the investment grade it lost in 2015, with the disaster of the Dilma government. Experience shows that when a country loses its status in terms of investment grade, that is, the seal of good motivation, it takes 10 to 20 years to restore the previous status. In this case, I think it’s very unlikely. Especially since one of the consequences of this rule is that there will be no stability of the ratio between debt and GDP, which was the main goal of the government, and which is the main demand of risk assessors in the financial market with regard to fiscal policy, “he analyzed.
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