Government Sends Fiscal Adjustment Bill to Senate

The federal government has submitted a supplementary bill to the Senate focused on fiscal adjustment. The measure seeks to balance public accounts through cuts to tax benefits and by curbing excessive public sector salaries.

The plan projects savings between 50 and 60 billion reais for the 2027 budget. The text establishes mechanisms to limit expenses if fiscal results fall short of expectations in bimonthly reports.

Companies currently enjoying full tax exemptions will be required to pay at least 20% of the standard rate. The use of tax credits to settle government debts will also face restrictions and be capped at 80% of the total value.

The bill mandates that Congress regulate the public sector salary cap within 120 days. The goal is to eliminate payments that exceed the legal limit through bonuses or extra allowances.

The government will have the authority to freeze non-mandatory spending to ensure fiscal targets are met. If this mechanism is triggered, spending growth for the following year will be limited to 2%.