President Luiz Inacio Lula da Silva’s recipe to raise revenues and balance Brazil’s budget mirrors a strategy leaders around the world have attempted to deploy: New taxes on his country’s wealthiest residents.
Lula’s economic team unveiled this week a series of measures to tax closed-end and offshore funds that are usually accessible only to deep-pocketed investors. The plans, which could bring in an additional 20.3 billion reais in revenue next year, are meant to help eliminate Brazil’s primary budget deficit while also making its tax system less regressive.
“What we’re doing is fair and sensible,” Lula said Tuesday after sending the bill to lawmakers. “I expect congress to protect the poor rather than the rich because Brazil needs that to become a more democratic, equal, middle-class society.” Privately, Haddad’s team has begun to acknowledge that he may break his promise to fully close the budget gap in his first attempt. But the new taxes are also meant to foster “social justice,” he said Monday.
Lula’s plans also require congressional approval, and lawmakers like lower house Speaker Arthur Lira have shown little willingness to advance them at least in their current form. When Haddad announced the proposals, at a public ceremony on Monday, the audience applauded. Lira, who was sitting next to Lula on stage, did not join in.
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