The false narrative of BBB

Once completed, Loss of validity of Provisional Measure (MP) No. 1303 during the vote in the Chamber of Deputies on October 08th.A veritable war of narratives began in an attempt to consolidate a position regarding the entire process. The concrete and objective fact is that an alliance between the right and the far right in that legislative body approved, on the last day of the aforementioned Provisional Measure's processing, a request to remove the matter from the agenda. In this way, at least formally, the content of the proposals embedded in the text that had been submitted by the Executive Branch back in June of this year was not voted on at that moment.

According to the rules for processing provisional measures, the text must be reviewed and approved by the National Congress within a maximum period of 120 days. Otherwise, the provisions contained therein lose validity once the proposal expires. Since a provisional measure takes effect immediately after its publication by the Executive Branch, what usually happens is the issuance of a legislative decree outlining the measures to be adopted regarding legal acts carried out during the previous 120 days that lost validity with the expiration of the provisional measure. This procedure is necessary to overcome the legal vacuum that arises in such situations.

The origin of all this imbroglio This political dispute, disguised as a political one, can be identified in the process by which the National Congress overturned President Lula's veto on a matter involving the Tax on Financial Operations (IOF). In that series of power struggles between the Presidential Palace and the legislative branch, the government reportedly failed to collect around R$ 20 billion, according to estimates from the Ministry of Finance. Therefore, the Executive branch decided to seek new ways to ensure balance in the primary accounts, as suggested by Fernando Haddad and included in the Budget Guidelines Law (LDO) as a goal to be achieved by the economic team.

MP 1303 expires. So what?

Thus, the document that gains prominence in the political debate and legislative process is the PM 1303There are several measures to increase revenue and others to reduce expenses. This is the Finance Minister's strategy to end 2025 with the goal of "zeroing the primary deficit" achieved and the mission of "fiscal responsibility" well fulfilled. The initial proposals to increase taxation involved raising the tax on "bets," expanding the tax incidence to some financial market securities (Real Estate Credit Notes - LCI and Agricultural Credit Notes - LCA), and establishing a Social Contribution on Net Profit (CSLL) rate for... fintechs similar to what happens with traditional banks, among other specific tax measures.

Regarding spending cuts, the same provisional measure proposes a set of measures in the primary accounts. The first of these is... Reduction in access to unemployment insurance during closed fishing seasons for artisanal fishermen.This is a benefit intended for those who dedicate themselves to fishing as a means of survival and who are prevented from doing so during the spawning season. The text then includes... an accounting trick that would allow the inclusion of expenses related to the social assistance program "Pé de Meia" in the rules for achieving the constitutional minimum spending on education. Finally, the document establishes new procedures for The granting of health assistance significantly restricts access to the benefit for all users. of the social security system.

However, once the provisional measure expired and the government found itself unable to rely on the revenue-raising and spending-reducing measures contained therein, a social media campaign began seeking to identify the federal legislature as the main villain in the story. By accusing the National Congress of being an "enemy of the people," the strategy is to focus solely on the supposed source of evil, since parliamentarians were allegedly preventing the taxation of the BBBs – banks, billionaires, and betting companies. However, none of this was present in the text submitted by the government, which would have gone to a vote had the agenda not been postponed on the evening of October 8th.

Neither "b" for banks, nor "b" for billionaires, nor "b" for bets.

Regarding the first "b," concerning banks, it's important to note that FEBRABAN and other entities defending the interests of traditional banks were working behind the scenes in favor of the Provisional Measure. The reason for this is that the sector has always fought for... fintechs They should receive the same tax treatment as their constituents. This difference in tax incidence, which benefits digital banks, was represented in the differential incidence of CSLL (Social Contribution on Net Profit). But it was not a measure of tax justice affecting the banking system as a whole.

Regarding the second "b," billionaires, Provisional Measure 1303 did not contain any provision that would affect their contribution to the tax revenue. Even if, marginally, establishing income tax rates for LCI and LCA could mean some degree of equality with other financial investments, such measures are far from implying significant taxation on billionaires. They remain exempt from taxation on their profits and dividends since 1995, and nothing has yet been done to implement the Tax on Large Fortunes (IGF), as provided for in Article 157 of the Federal Constitution since 1988.

Finally, regarding the third "b," betting, it cannot be said that the Provisional Measure addressed the issue adequately either. The initial proposal increased the taxation on the sector's revenues from 12% to 18%, a clearly timid and insufficient measure in the face of the social and economic disaster that betting has been causing to society as a whole. However, the betting lobby was so strong that not even this cowardly and shameful amendment was forwarded. The rapporteur had removed the provision in the final rounds of negotiation, and the betting companies would continue to pay what they are paying.

MP 1303 only had spending cuts.

In other words, the attempt to accuse the National Congress of preventing the government from taxing the BBBs (Big Brother Brazil) is a major distortion of reality. The expired measure contained nothing that significantly affected banks, billionaires, or betting companies. The only proposals that would remain in the text were those aimed at reducing budgetary expenses, always with Fernando Haddad's intention of maintaining his image as a "good guy" with Faria Lima (the financial district of São Paulo). The Finance Minister's obsession with strictly adhering to the draconian rules of the New Fiscal Framework, conceived by himself, has caused social wear and tear from cuts in social policies and difficulty in increasing the GDP growth rate above 2,5% per year.

Thus, the primary surplus target for 2025, self-imposed by Lula himself on the entire government, condemns the Executive branch to spend 12 months a year searching for social spending categories to cut in the name of achieving the sacrosanct primary fiscal balance. Because of this approach, the government continues to turn a blind eye to the explosion of financial expenses, including public debt interest. This expenditure has been dangerously approaching the tragic mark of R$ 1 trillion over 12 months. But these numbers are far from the much-touted impact of the government's supposed desire to tax the BBBs (Big Brother Brazil).