In the minutes of its last policy meeting, the Brazilian Central Bank’s Monetary Policy Committee sent the government a message — stressing the importance of the federal administration “firmly pursuing” fiscal targets. And these are bold targets: according to the fiscal framework that the Finance Ministry proposed and Congress approved, the government must zero the primary deficit already next year.
For this goal to be even achievable without deep budget cuts, the government must increase federal tax revenue by BRL 168 billion (USD 32.7 billion). The Finance Ministry has made various proposals to make that possible, including bills to tax offshore investments and the so-called “exclusive” investment funds — which are used by the super-rich.
The 2023 State of Tax Justice report, released in July by the NGO Tax Justice Network, shows that tax evasion and optimization cost Brazil USD 7.7 billion last year. That amount represents 1.7 percent of total tax revenue, the NGO says, or 10.2 percent of the country’s health budget and 6.6 percent of its education spending. The lion’s share of the losses is due to “tax abuses committed by multinational corporations,” the network explains.
Primary surpluses have been elusive in Brazil. In 2022, the last year of the Jair Bolsonaro administration, finances returned to the black after eight years of fiscal deficits. However, analysts considered the improvement in public finances in 2022 to be a one-time occurrence.
“Brazil is not in a situation of fiscal balance,” Marcus Pestana, a director at the Independent Fiscal Institution, a think tank focused on monitoring...
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