Understand the new tax framework that Haddad brought to Tebet – Money Times

This Thursday (09) Minister Fernando Haddad (farm) and the minister Simon Tebbit (PlanningHold a scheduled meeting to discuss the new framework supervisor who will replace spending cap.

Tebbit confirmed yesterday that the project is already in his hands and that the portfolio will carry out an analysis from the point of view of the ministry, which is concerned with the budget and taxes.

a Ministry of Finance He finalized the text of the new financial rule last week, but it still needs approval from Lola And other ministries in the economic field. second the worldthe folder wants to use the GDPR (gross domestic product) per capita as a reference for spending.

Under the current spending cap rules, which were created in 2016, federal government expenditures are blocked pursuant to economic inflation from the previous year. The new rule allows spending to increase above this level.

The idea is that the fiscal base will be countercyclical. That is, during periods of economic acceleration, spending does not grow. However, in recessions, there will be no reduction in public investment.

The government must also submit a fortnightly report evaluating revenues and expenditures, in order to show that the implementation of expenditures will be carried out in a balanced manner.

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Ettore Sanchez, chief economist at Ativa Investimentos, points out that the reversal of the new framework, even with a healthy trajectory, will appear gradually.

“However, it is worth noting that the government has repeatedly stressed the search for a ‘flexible base’ that meets the country’s immediate need, not to mention that little is said about changes in the spending trajectory, which always link the best fiscal prospects to recipes,” he says.

Finance sends greetings to the central bank

Haddad’s plan is to send the project to Congress Later this month, preferably before the next meeting of the Monetary Policy Committee (cobum), scheduled for March 21-22. That is, he has less than 15 days to settle the details and get the president’s blessing Luiz Inacio Lula da Silva and persuade parliamentarians.

The idea is that the new rule refers to central bank The new government is worried about fiscal responsibility, though Lola After spending most of the election campaign criticizing the spending cap. In the final minutes, Copom highlighted that inflationary expectations are high and that one factor is the future of public spending.

In January, the government clashed with the central bank over Silicwhich Lola considers too high. base rate for expenses at the level of 13.75% since August last year. Since then, Haddad has been close to the president Roberto Campos Neto Try to maintain a good relationship with the monetary authority.

“Presenting the new financial framework to the public before a central bank meeting could at most marginally change the authority’s communications regarding financial signals, without effective developments, for Selleck,” says Ettore.