Lula says Congress now owns the proposal for income tax exemption, but warns: "Things can never get worse."

247 - The government of President Luiz Inácio Lula da Silva (PT) officially presented, this Tuesday (18), the proposal that exempts from paying Income Tax (IR) those who earn up to R$ 5 thousand per month. The project, which will need to be approved by the National Congress, also establishes a minimum tax for high-income taxpayers as a way to compensate for the estimated tax waiver of R$ 27 billion.

During his speech, Lula emphasized that Congress will have the autonomy to debate and modify the proposal, as long as the changes do not harm the population. “Whenever we send a bill to Congress, it becomes the owner of the proposal and has the right to make changes. I hope that if it's to improve things, great. To make things worse, never,” said Lula, according to the newspaper. The Globe.

The president exemplified the benefits of the exemption with the case of a driver who currently pays R$ 81 monthly in income tax. With the change, this professional will no longer pay the tax, saving R$ 1.068 per year. The initiative fulfills a campaign promise by Lula and seeks to reinforce his popularity at a time of declining approval ratings.

Lula also argued that the measure is fair and will not negatively affect the wealthy. "It won't stop those who contribute from eating their meat, their shrimp, their filet mignon. But it will allow the poor to eat their meat," he stated, emphasizing that the goal is to reduce inequality and improve the population's standard of living.

The proposal is considered the main item on the Planalto Palace's legislative agenda for this year, with implementation scheduled for 2026. "We are asking Brazilians who earn more, who live off dividends and have never paid income tax, to contribute and raise the standard of living of the Brazilian people," argued Lula.

Currently, workers earning up to R$ 2.824 per month are exempt from income tax. The government intends to raise this limit to R$ 3.036 later this year, equivalent to two minimum wages, but the change has not yet been officially announced. According to the Minister of Finance, Fernando Haddad, the expansion of the exemption will benefit approximately 10 million taxpayers.

The project also includes progressive tax rates for those earning over R$ 600 annually, covering practically all income, with some exceptions. The new taxation is expected to affect approximately 141 people, mostly beneficiaries of dividend income. Those earning more than R$ 1,2 million per year will start paying at least 10% tax on their total income.

Currently, dividends are only taxed at the corporate level, with a fixed rate. This allows high-income taxpayers to pay proportionally less tax than those who live on salaries. The government's proposal seeks to correct this distortion, ensuring a more equitable tax distribution.

Approval of the bill now depends on the National Congress, which will need to deliberate on the details of the measure and its fiscal implications.