President Luiz Inácio Lula da Silva has approved BRL 7.5 billion (USD 1.5 billion) in congressional budgetary grants this week. These instruments allow members of Congress to earmark chunks of the budget for projects of their choosing, usually in their constituencies.
At no other point in his six months in office has the president allowed so much money to be earmarked in a single week.
The grants are part of the administration’s push to rally support for its economic agenda. The House is scheduled to vote on the tax reform proposal, the new fiscal framework, and a bill to restore the government’s tie-breaking vote in Carf, Brazil’s tax appeals court.
House Speaker Arthur Lira is working to cram the required two rounds of voting on the tax reform bill into Thursday’s sitting alone, after the government, congressional leaders, and local administrations reached a compromise on some of its key provisions.
Not surprisingly, Mr. Lira’s Progressives party received the most money in grants: USD 232.5 million on Wednesday alone.
Mr. Lira has put his political weight behind the tax reform, but the government hopes he will do the same for the vote to change the rules of the tax appeals court — the tie-breaking vote will allow the government to increase revenue.
Politicians demanded more money and offices to approve the Carf bill, which the government hopes to be sewn up before the congressional break in the middle of the year.
Jair Bolsonaro’s Liberal Party comes in second place in terms of grants received, collecting USD 108 million in one day. Despite being from the opposition, the party holds 99 seats in the lower house, almost one-fifth of the chamber.
Formed by representatives of the government and society, Carf decides on tax disputes. The government originally had the tie-breaking vote for any deadlocked disputes, but Congress extinguished that prerogative in 2020.
Of the BRL 25.4 billion in lawsuits that resulted in a tie in 2022, tax authorities won only 2 percent of the amount. In 2019, before the end of the tie-breaking vote for the government, its win rate reached 82 percent.
At the end of May, Lula also made a huge grant release, BRL 1.7 billion, during the vote on a bill that established the structure of his cabinet. It was approved even though Congress changed important elements of his ministries – such as taking powers away from the Environment Ministry to favor agribusiness.
This new round of spending reflects the government’s continued lack of focus, which makes coalition-building much more expensive – and has to be redone with each new key vote.
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