This week, Finance Minister Fernando Haddad held a press conference in which he chastised lawmakers for their role in reducing government revenues.
Mr. Haddad pointed the finger directly at Congress, arguing that it has enacted policies that have opened loopholes for unwarranted subsidies and hurt government revenues. The finance minister is referring to a supplementary law passed by lawmakers in 2017, which reaffirmed the tax benefits granted by the states to companies and industries.
The decline in federal revenues has raised doubts about the government’s ability to meet its fiscal commitments. Indeed, a day later, the government acknowledged that it was discussing changes to the 2024 fiscal targets. Importantly, all fiscal talks are so far hypothetical, as Congress has yet to approve next year’s Budgetary Guidelines Law.
Mr. Haddad’s words raised a growing concern among those who have watched the strengthening of the legislative branch in recent decades: are lawmakers capable of standing up to the powerful influence of interest groups in the legislative arena?
Background on subsidy loopholes
To understand...