Bolsonaro’s priorities in the economy, a central theme in 2022

The economy will be the topic that will influence voting the most in 2022, according to recent polls. A survey by the Instituto Paraná Pesquisas indicates that the most important factors for Brazilians when choosing a president for next year will be job creation and economic recovery. Likewise, the CNT / MDA survey showed that improving the economy and employment will be an important theme in the definition of the candidate for 49% of respondents, and controlling inflation was cited by 31%.

With this in mind, the government of Jair Bolsonaro (PL), likely candidate for re-election, should reserve the measures aimed at the economic rescue of the country for the election year and focus on income distribution policies for the population in situation of poverty and the so-called “invisible”. Other less complex economic proposals are also on the executive’s priority list.

Structuring reforms, such as administrative and fiscal reforms, should remain in the background, given their complexity and the short time for articulation – and, in the case of new rules for civil servants, the political impacts involved. should also weigh.

Delivered to Congress in July 2020, the first phase of the tax reform, aimed at taxing consumption, did not advance in the Chamber of Deputies. The project unifies PIS and Cofins in a new tax, the Contribution on Goods and Services (CBS), at the rate of 12%.

On the other hand, the reform of the income tax rules, presented last June, was approved by the Chamber of Deputies at the beginning of September. Among other things, the proposal increases the exemption range for individuals, restricts the simplified haircut and recreates the taxation of profits and dividends. But the case did not move in the Senate – the rapporteur, Senator Angelo Coronel (PSD-BA), warned it should be closed.

Administrative reform should not be a priority for the ruling base in Congress and government, which lacks the political capital and sufficient time to pass the proposal. The president himself admitted that the window for structural reforms has closed.

“These reforms must take place in the first year of every government. We are practically finishing the third year [de governo]. If you don’t approve it this year, next year you can forget, “Bolsonaro said at the end of October. According to Minister Paulo Guedes, the case has been blocked by the president’s entourage.

One of Congress ‘most experienced articulators, Government House Leader Ricardo Barros (PP-PR), believes that electoral disputes will contaminate parliamentarians’ analysis and bury any possibility of approving administrative reforms and tax in 2022. “No, there is a chance of approving the reforms,” Barros said at the end of December.

The head of the economy must, however, insist on the agenda even in an election year and with little chance of approval. In a meeting with businessmen, the minister said he believed in a scenario in which the reform could be approved.

Guedes criticized what he sees as “a convention in the political world that an election year is not reformed, nothing is done, the game is over and the message I have received here from the class of business is ‘no, let’s continue the reforms’ “. “These reforms are important, they help Brazil to grow and to garner votes,” he said.

Administrative reform was sent by the government to Congress in September 2020, but is stuck in Parliament. It was approved by a special committee of the Chamber of Deputies in September this year, but since then it has not left its place and there are still no planned plenary votes.

Among the main points of the administrative reform underway in Congress is the provision of stability for all employees, even with the possibility of dismissal for insufficient performance, a transitional reduction in working time of up to 25%, with a reduction in salary in the event of a crisis tax, temporary work authorization for a maximum period of ten years, restrictions on “privileges” and end of compulsory retirement.

Bolsonaro is also awaiting the approval of PL 591/2021 for 2022, which deals with the privatization of Correios. The bill has already been approved by the Chamber and is awaiting analysis by the Senate CAE. Responsible for the report on the issue, Senator Otto Alencar (PSD-BA) decided to postpone the debate due to opposition resistance and doubts expressed by some parties. Critics say the proposal is unconstitutional, since Magna Carta determines that the Union is responsible for maintaining the national postal service and airmail.

Among other things, the legislative proposal creates a regulatory framework for the sector, currently under a monopoly regime, and defines general rules for the National Postal Services System (SNSP), in addition to the rights and duties of consumers and generic rules. for private companies entering the postal market.

Emphasis should be placed on “micro-reforms”

Without the necessary political capital and facing a more difficult scenario for macro-reform approval, the government is expected to focus its efforts next year on what is seen as a new economic agenda, which focuses on the so-called “Micro-reforms” in The sector. The treatment and discussion of the proposals that make up this agenda are considered less complex, both from a technical and political point of view.

Examples of micro-reforms recently approved by Congress are the legal framework for trade and the legal framework for railways. But there are still proposals to analyze, such as the following:

Electricity sector framework (bill 414/2021), legal framework for reuse (PLP 33/20), legal framework for PPPs, public-private partnerships (PL 7063/17); Infrastructure Debentures Project, which creates new financial instruments for infrastructure projects (PL 2646/20); New Practice Law (PL 2149/15); PEC for the extinction of public funds (PEC 187/19); New law on environmental licenses (PL 3729/04); Mining on indigenous lands (PL 191/20); Reform of the law on forest concessions (PL 5518/20); EOil production sharing scheme (PL 3178/19).

The government’s expectation with the approval of the proposals is to reduce the so-called “cost of Brazil” to R $ 124.5 billion per year.

Social policies and readjustment for security servers

In 2022, the government is also expected to focus on increasing aid from the Auxílio Brasil program, increasing the number of beneficiary families from 14.5 million to 17 million. The executive also plans to erase the waiting list for the benefit next year. The average benefit will be R $ 415, according to the 2022 budget approved by Congress.

This year the Bolsa Família program was closed and, in its place, the government launched Auxílio Brasil, aimed at families living in poverty and extreme poverty. The interim measure that creates the program was approved by the Senate in December.

On the other hand, Bolsonaro must ignore other social measures, such as those aimed at housing. Focused on Auxílio Brasil, the executive emptied the budget of Casa Verde e Amarela.

Union money for the housing program has fallen over the past two years. It went from BRL 4.8 billion in 2019 – when it was still called Minha Casa, Minha Vida – to BRL 2.7 billion in 2020, the lowest value since 2012.

In 2021, there was another drop, with the updated allocation reduced to just BRL 1 billion. The value will change little next year: The federal budget approved by Congress has set aside R $ 1.17 billion for the program.

In a nod to civil servants, the government has also planned a salary adjustment next year. This is another point on which Bolsonaro and Guedes differed. The president declared that it was necessary to “correct the injustices”.

Guedes, on the other hand, said the measure should be specific and targeted. “There may even be a restructuring, a reform, but it has to be a specific company, very localized and very limited in number,” he told reporters during a Fiesp event.

Although the President has promised an increase – “that it be 1% – for all public servants,” without exception “, the 2022 Budget approved by Congress only provides for an adjustment for careers in the Federal Police, Federal Roads Police, National Prison Department and Ministry of Justice The amount set aside is 1.7 billion reais, less than the 2.9 billion reais the government had requested for members of Congress.

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