Congressional boycott of government stalls proposal to exempt income tax on income up to R$ 5.

247 - Amid escalating tensions between the Presidential Palace and the National Congress, the progress of the bill that provides for income tax exemption for those earning up to R$ 5.000 per month is stalled. This information comes from... FSPThe report, based on information obtained from legislative sources, indicates that the proposal, considered a key element in President Lula's social policies, no longer has a date set for advancement.

The rapporteur for the project, Deputy Arthur Lira (PP-AL), had promised to present the preliminary report on Friday (27), but backed down. According to sources, Lira assessed that the climate of conflict between parliamentarians and the government makes it impossible to release the text at this time. "It makes no sense to present the report now and leave the proposal under attack, without any prospect of it being analyzed by the plenary," the deputy told allies, according to the report's findings. 

Tensions escalated on Wednesday (25), when the Chamber of Deputies rejected by a large majority — 383 votes to 98 — a draft legislative decree that cancels the increase in IOF (Tax on Financial Operations) instituted by the government as a measure to balance the budget for this and next year. In the Senate, the rejection was confirmed in a symbolic vote, without nominal registration of the votes. 

Behind the dispute lie the delay in the payment of parliamentary amendments from 2025 and previous years, as well as the discomfort among congressmen with the public criticism made by members of the government regarding the Legislative branch's actions. Parliamentarians also protested against overturned vetoes that could impact public finances, such as the one that foresaw increases in electricity bills.

At the epicenter of the criticism is Finance Minister Fernando Haddad, whose fiscal adjustment agenda based on increased revenue has faced resistance in Congress. Deputies allied with the Speaker of the House, such as Hugo Motta (Republicanos-PB), are pushing for spending cuts. 

Within the government, discomfort is growing regarding Motta's stance and that of some of the allied base. Parliamentarians who support the government reinforce the discourse that the Executive's proposals aim to reduce inequalities, and accuse sectors of Congress of protecting the "penthouse residents" who, according to the government, pay proportionally less taxes than ordinary workers.

Given this scenario, Arthur Lira acknowledges that it is unlikely the Income Tax bill will be voted on in the short term. Despite stating that there is consensus in the legislature on the importance of exempting those earning up to R$ 5, the point of contention remains: how to compensate for the loss of revenue.