The project that limits federal government spending, called the New Fiscal Framework (NAF), had its basic text approved in the Chamber of Deputies by 372 votes, in victory for the political articulation of the Lula government. The idea is that the measure replaces the spending ceiling, created by the Michel Temer government, which prevented any growth in expenses, only authorizing the pass-through of inflation for decades.
The new rule allows that, if the targets proposed by the government for collection and expenses are met, investments can rise up to 2.5% per year in addition to inflation. If they are not met, the investment will have to be smaller. The rapporteur for the measure in the Chamber, Cláudio Cajado (PP), even added penalties to the original text, in case of not containing expenses, such as the prohibition of new public tenders.
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Left criticizes NAF
The idea of the measure, although it is more flexible than the ceiling, is to prioritize interest payments and contain the increase in public debt. This is one of the reasons why parties allied with the PT, such as PSOL, voted against the NAF, which had the support of right-wing parties and Bolsonarist deputies.
Different organizations and left-wing analysts are critical of the new fiscal rule. In general, they recognize the need for a fiscal rule, harshly criticize the previous spending cap rule and admit that the neoliberal legacy of the Temer and Bolsonaro governments is heavy. In that sense, the new tax rule is better.
However, they point out the tendency of the current project to limit public spending, which will be a problem to leverage the economy. Parliamentarians such as Carol Dartora (PT-PR) voted in favour, as expected, as the base of the government. But they made a public note against some points of the project.
:: All about the new fiscal framework in 25 questions and answers ::
Read below opinions on the approved text, which will still have a vote of highlights in the Chamber and, later, analysis of the Senate.
Fight for new parameters
“The fiscal framework is a fiscal rule confined to the limits of the neoliberal model. A much more advanced proposal requires confronting the model itself, which does not seem to be on the agenda. The neo-fascist threat imposed a broad front that brought together not only neo-developmentalist sectors (who do not intend to break with the neoliberal model, but to mitigate it) but also some orthodox neoliberal sectors that have greater contradictions with Bolsonarism. Workers remain on the defensive and unable to present an alternative program that points to a break with the neoliberal model. We must fight for the fiscal framework to have less restrictive parameters for public investment, allowing the State to act as an inducer of economic growth and lengthening the trajectory of convergence of the public debt”, points out Pedro Mattos, from the national board of the Popular Consultation.
Dartora criticizes obvious negative effects on public services, such as the ban on holding public tenders and the freezing of civil service salaries / Divulgation mandate Carol Dartora
Impact on public service
“We consider that the Cajado report greatly aggravated the norms for contracting public expenditures, severely limiting the State’s ability to carry out social justice and command a new cycle of development. If the original constraints on the growth of primary expenditures were already worrying, determined by a ceiling of 2.5% in annual evolution, above inflation, new barriers adopted, such as the so-called triggers, make the scenario even more dangerous. Even if the primary results targets are exceeded, only 70% of the eventual excess balance can be released as investments. However, if these goals are not achieved, in addition to spending growth falling to 50% of revenue expansion, the other punishments provided for are draconian, with obvious negative effects on public services, such as the ban on holding public tenders and the freeze of civil service salaries”, says Carol Dartora, Federal Deputy (PT – PR).
State tends to reduce investment
“The spending cap was created to ensure that public resources were drained to the financial sector. One of the ancestors is the famous Fiscal Responsibility Law of the Toucan governments. Therefore, the first thing that needs to be made explicit: fiscal rule, in this neoliberal world, is not an instrument to guarantee that governments spend well. Fiscal rules, in this neoliberal world, are not an instrument to prevent governments from spending more than they collect. This fiscal rule, in an era of neoliberalism, has another objective: to guarantee that a part of the resource collected, in the form of taxes, serves to feed the financial sector. The first question is: Did you need a new tax rule? Yes, I did. Otherwise, the spending cap would remain in effect. (…) A second question is: was the fiscal rule proposed by the Ministry of Finance good? It’s better than the spending cap, but it’s far from a good thing. There it is established that we have to have zero deficit and primary surplus in the coming years. I ask: is this in a devastated country supposed to be a goal? It also says that expenditure growth will always be lower (70%) than revenue collection growth. Is that fair in a country that desperately needs public service investment? In the long run, this rule leads to a reduction in the size of the state in the economy. And does a country like Brazil need less or more investment from the State? Less or more public services?”, Valter Pomar, member of the national leadership of the Workers’ Party (PT).
Source: BdF Paraná
Editing: Frédi Vasconcelos
