Congress overturned the federal government decree that increased the IOF, the Tax on Financial Transactions. Hours after the Chamber, the Senate also voted and approved, on Wednesday (25), the draft legislative decree that suspends the effects of three decrees issued by the federal government regarding the increase in IOF rates.
In the Chamber of Deputies, there were 383 votes in favor of canceling the measure, against 98. And in the Senate, the vote was symbolic. The decree covers loans, financing, credit card transactions and remittances of funds abroad.
With the result of Wednesday’s votes, the federal government will need to define other ways to raise or save R$20.5 billion to meet the fiscal target of the 2025 budget. This is because it has already blocked or contingent another R$31.3 billion in expenses this year.
The government was already looking for alternatives and issued a Provisional Measure (MP) that includes the taxation of sports betting, known as bets, among other measures. However, the measures face resistance in Congress.
Tax changes beyond the betting sector
Among the points foreseen in the MP are the increase in interest on equity, the taxation of crypto assets and the unification of Income Tax on investments. Even so, the taxation of bets emerges as one of the main instruments of rapid collection for the government, increasing from 12% to 18%.
The fiscal target for 2025 is a zero deficit, with a tolerance of up to 0.25% of the Gross Domestic Product (GDP), equivalent to R$31 billion. To reach this limit, the government has already blocked R$31.3 billion from the budget — the largest contingency in five years.
Marcos Praça, director of Zero Markets Brasil, pointed out that the political scenario could prevent the MP from moving forward. As he stated : “I believe that, because we have elections next year, parliamentarians will continue to hamper the government, hindering it as much as possible.”
Harrison Gonçalves, from CFA Society Brazil, defended the focus on cutting expenses. According to him: “It is essential to organize public accounts and cut expenses before thinking about new tax increases.”
However, the government has already been informed by leaders in the Chamber of Deputies that the provisional measure has little chance of moving forward and would need to be reviewed. The message, according to Valor, was passed directly to the executive secretary of the Ministry of Treasury, Dario Durigan.
Therefore, the draft legislative decree that suspends the effects of three decrees issued by the federal government on the IOF will now be enacted.
