Circulates in draft PSB for PECs; more radical version would repeal spending ceiling, Golden Rule and primary result target
Members of the PSB together with public officials who work with the budget prepared a document with guidelines for two PECs (proposals for amendments to the Constitution) that must be presented to the president-elect, Luiz Inacio Lula da Silva (PT). In one of them, the most radical, the idea is to do away with the country’s main fiscal rules: spending ceiling, Golden Rule and the primary result target and seek another fiscal anchor.
The notes obtained by Power 360 come to light at a time when Lula’s transition team is preparing a PEC to break the spending ceiling and be able to fulfill campaign promises, such as the Auxílio Brasil of R$600, the additional R$150 per child up to 6 years old and real increase in the minimum wage.
None of these expenditures are foreseen in the 2023 budget proposal submitted by the current government, from Jair Bolsonaro (PL). The total cost of the Auxílio Brasil of R$600 and the extra R$150 per child alone is in the range of R$176 billion.
It is not by chance that the objectives of the constitutional changes suggested in the PSB document include in the LOA (Annual Budget Law) of 2023 the “Family Scholarship” of R$ 600, the increase in the minimum wage by 1.4% above official inflation and “other expenses to be defined”.
The document also outlines the objective “simplify” fiscal rules, making it clear that doing so would mean taking them out of the Constitution. Here’s what it proposes instead, without going into detail:
- Limits to the evolution of tax expenditure;
- Parameters for the trajectory of public debt;
- Criteria for annual spending review.
In the guidelines for a 2nd PEC, the idea would be to free the government to, in times of crisis, spend and reduce taxes to boost growth. In the period of growth, it would raise taxes, create reserves and pay off debts.
This would mean, according to the sketch obtained by the Power 360include in the constitutional amendment of the spending ceiling new exceptions to the rule, such as income transfers to families in poverty and extreme poverty (Auxílio Brasil, or Bolsa Família, if renamed) and the deficit of Social Security.
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