Congress cuts budget revenue forecast after exemption

Congress decided to cut the government’s revenue forecast 2025 Budget which depended on the approval of government projects after considering the effects of the payroll tax exemption, approved by the Legislature and sanctioned by President Lula, and not voting on the project forwarded by the Executive Branch that increases the Social Contribution on Net Profit (CSLL) and Interest on Own Capital (JCP), stopped in the Chamber.

The revenue report was approved on Friday (7), by the Congressional Joint Budgets Committee. It is a stage prior to the analysis of the remainder of the 2025 Budget, which involves federal government spending. The revenue estimate serves as a “cushion” to accommodate and finance next year’s expenses, including parliamentary amendments.

The government sent the budget proposal with a forecast of R$47 billion in revenue that depended on Congressional approval. They would be “hanging” and would only occur if certain proposals passed the scrutiny of parliamentarians. On the other hand, some Budget expenses would also be linked to this collection, such as Social Security benefits.

Of this amount, R$25.8 billion was scheduled with the end of the payroll tax exemption in 2025, which impacts companies and municipalities. The Executive and Congress, however, reached an agreement to continue the measure, with gradual reimbursement starting in 2025. The estimated impact is R$18.8 billion next year with the compensation measures. Therefore, the Budget revenue rapporteur, deputy Domingos Sávio (PL-MG), incorporated this estimate into the report.

Payroll relief was introduced in 2011 for labor-intensive sectors. Together, they include thousands of companies employing 9 million people. The measure also covers small municipalities.

In addition to the exemption, the government expected to raise R$20.9 billion by increasing the rate of the Social Contribution on Net Profit (CSLL), a tax charged on companies’ profits, and the Income Tax on Interest on Equity (JCP), remuneration paid by companies to their shareholders.

The project, however, is stalled in Congress and there is no forecast for a vote this year. The rapporteur decided to cut this forecast by R$13.4 billion.

With the reduction in this revenue, there will be impacts on programs that would be financed with the money, mainly Social Security benefits, which depended on R$43.7 billion of these conditional revenues. In practice, the government will now need other resources to finance these expenses in the Budget, which are mandatory.

Despite cutting revenues that depended on Congressional approval, the rapporteur increased the federal government’s total revenue estimate in 2025 by R$22.5 billion, which should accommodate the approval of the Budget. The explanation was the performance of the economy, which surprised after data on the Gross Domestic Product (GDP) and the wage bill.

CRITIQUES

The rapporteur, however, made some criticisms regarding the collection programmed by the government. Among them is the forecast of R$ 28.6 billion for the return of the casting vote in Carf (Administrative Council of Tax Appeals), the Federal Revenue court. In 2024, the government said it could raise R$54.7 billion with this measure, but less than R$300 million entered the public coffers. He did not change the revenue forecast from Carf after appeals from the government.

“This report sought information regarding the significant increase in other administered revenues and was informed that the Executive Branch remains confident that efforts to recover credits through analysis by the Administrative Council of Tax Appeals of transactions of relevant and widespread legal controversy will yield the amounts estimated in the proposal, despite the disappointing performance in 2024”, stated Domingos Sávio in the report.