Arcabouço fiscal: Haddad's next steps to approve rule replacing teto de gastos

Tax law anticipates increases of 0.5% in 2025 and 1% in 2026, but only if the government is successful in getting the Fazenda's proposal approved in the Câmara and the Senado.

After months of anticipation, the proposal for a new fiscal arcabouço received the green light from President Luiz Inacio Lula da Silva on Tuesday during a meeting with the minister of agriculture,

Fernando Haddad, and other federal government officials in the Palácio do Alvorada. Haddad then started a roundtable discussion with party leaders prior to sending the formal text to Congress.

The fiscal arcabouço or âncora is a set of budgetary rules designed to prevent excessive government spending.

If approved by the Congress, the new regulation will take the place of the existing teto of expenses,

which caps the growth of federal spending at the rate of inflation in the previous year. The Lula administration believes that the teto has decreased

the government's ability to make investments in recent years. As a result, the new âncora aims to increase the Executivo's space for expenditures.

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