R$ 10 billion. That is how much the federal government has already cut from mandatory spending in the 2027 budget approved by Congress two weeks ago, according to the Finance Minister. In practical terms, that is about R$ 47 per Brazilian that would stop leaving public coffers next year.
The promise to go further came on Friday (28) from Dario Durigan, the Finance Minister who serves as the economic spokesman for President Lula's reelection campaign. In an interview with C-Level, a weekly videocast from the newspaper Folha de S.Paulo, he said Lula wants, if reelected in October, to lift payroll taxes for every sector of the economy to lower the cost of hiring in Brazil. The proposal would shift the tax now levied on wages to companies' gross revenue.
How payroll relief would work
Payroll relief means exempting companies from the social security contribution they pay on top of wages. Today, for every R$ 1,000 in payroll, an employer pays R$ 200 to INSS, Brazil's social security agency, plus other charges. The government's idea is to swap that tax for a rate on gross revenue, meaning what a company earns from sales and services.
Durigan said the previous version of the policy, scrapped by the current government itself, had a flaw: it favored chosen sectors. The new model, he said, would be general and equal for all, as part of a broader discussion about corporate tax reform.
"I am willing to discuss migrating payroll taxation to some other parameter, such as revenue. What was the problem with the payroll tax relief that we fought to end, and did? It picked sectors. It is time to have a broader discussion about corporate tax reform," the minister said.
On the spending side, Durigan said Lula committed to reviewing mandatory expenses, items whose increases are guaranteed by law, including social benefits, and to creating new spending brakes. According to Brasil 247, the plan includes triggers to curb personnel costs starting next year. "The job of a Finance Minister in a next Lula government is to improve the fiscal condition every day by reducing mandatory spending," he said.
The minister also defended the arcabouço fiscal, the rule that now lets public spending grow up to 2.5% above inflation. "The fiscal framework worked. We grew spending in the country, but at a slower pace than revenue," he said, admitting the parameters can be adjusted to ensure public debt falls.
Among the examples of restraint, Durigan cited the BPC, a benefit paid to poor elderly and disabled people: he said 25% to 30% of grants were being made through the courts, without standardization, and the government partnered with the National Justice Council, the judiciary's oversight body, and adopted biometric identification to organize the rolls.
The minister also rejected the idea that the economy is in crisis, despite court-supervised restructurings at companies such as retailer Casas Bahia and restaurant chain Habib's, accusing the opposition of exploiting the cases politically. According to Brasil 247, he also pressed for cuts to the Selic, Brazil's benchmark interest rate, which drives up the cost of credit for anyone financing a car, a home or working capital.