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Lula says tax fight hasn't weakened Brazil finance minister

Daniel Carvalho, Bloomberg News on

Published in News & Features

Brazil’s President Luiz Inácio Lula da Silva denied that Finance Minister Fernando Haddad was weakened after Congress refused to act on a provisional measure considered crucial for the country’s fiscal balance.

“Haddad will never be weakened as long as I am president because he is my finance minister, chosen by me and held by me,” Lula said Saturday at a news conference in Italy.

Haddad suffered a major blow Tuesday, when Senate leader Rodrigo Pacheco swatted down a proposal to limit tax credits to cover the cost of an exemption from payroll levies, casting doubts about the minister’s ability to control fiscal deficits.

The plan drew severe backlash from Congress and industries that rely heavily on such credits. The setback has increased the chances that Haddad will have to scale back the government’s fiscal target for 2024.

Lula told journalists that the obligation to find a solution to compensate for the tax benefit lies with businessmen, not the government. If an exit isn’t found, payroll relief for 17 sectors and small town municipalities can be voided.

The market reacted negatively, and on Thursday Haddad waived a review of government spending. Two days later, Lula said in Italy, after G-7 meetings, that if his minister has a proposal, “he will sit down to discuss economics” with him, but stressed that the government “will not make adjustments on the poor.” Lula said he called a meeting of his budget council next week to discuss spending.

Vice President Geraldo Alckmin said Brazil will work to increase revenue by fighting tax evasion and reduce spending by reviewing expenses.


“We should try to have cuts in the short, medium and long term,” he told reporters in Brazil.

Lula also condemned a bill that would classify abortion after the 22nd week of pregnancy as a murder and establish harsher penalties for the victims than for the rapists.

The president said he was against abortion but considered the proposal “insanity.”

“I’m against abortion, however, as abortion is reality, we need to treat abortion as a public health issue,” he said. “I think it’s insanity for someone to want to punish a woman more than the criminal who did the rape.”

The abortion bill remains in the early stages of the legislative process.

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