Brazil lower house nixes Lula's financial transactions tax hike
Brazil's President Luiz Inacio Lula da Silva stands on the day he attends a press conference at the Planalto Palace in Brasilia, Brazil June 3, 2025. REUTERS/Adriano Machado/File Photo
BRASILIA - Brazil's lower house of Congress on Wednesday overturned a May decree from President Luiz Inacio Lula da Silva raising the financial transactions tax (IOF) on certain credit, foreign-exchange and private pension plan operations.
The measure now heads to the Senate, where it could ultimately roll back Lula's directive.
The move marks a setback for Lula's government, which had opted for the tax hike as a way to boost revenue and limit the size of spending freezes needed to comply with fiscal rules.
It also underscores the government's failed strategy to negotiate with Congress, which quickly rejected the tax measure. Much of Lula's economic agenda has snagged in Congress this year - including proposed spending cuts - as his approval ratings slump ahead of next year's presidential election.
The tax hike was first announced by decree in late May and was projected to raise 61.5 billion reais ($11.07 billion) through 2026 by raising taxes on a range of transactions, including corporate loans and foreign-currency card payments.
The announcement triggered immediate backlash, prompting the government to walk back the tax increase on certain overseas investments within hours, amid criticism that it was effectively introducing capital controls.
Earlier this month the government submitted a revised, watered-down decree with lower rates that still affected corporate borrowing, foreign exchange and pension funds.
Lula's leftist government has boosted spending on social programs while seeking to shore up public finances by targeting what it views as unfair tax breaks largely benefiting the rich.
But Congress, where Lula lacks a solid coalition, has insisted it will not approve new spending without cost-control measures. Lawmakers have also weakened or blocked the few proposals to cut spending that the government has submitted. REUTERS
Join ST's Telegram channel and get the latest breaking news delivered to you.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
10 minutes ago
- Straits Times
JB-Woodlands train to end service in 2027, after RTS Link begins operations: Malaysian official
Operated by Keretapi Tanah Melayu Berhad, Shuttle Tebrau began transporting passengers between Singapore and Malaysia in July 2015. PHOTO: LIANHE ZAOBAO JB-Woodlands train to end service in 2027, after RTS Link begins operations: Malaysian official The Shuttle Tebrau train service between Johor Bahru and Woodlands will cease operations in 2027 after the Johor Bahru-Singapore Rapid Transit System (RTS) Link begins its service. '(The Shuttle Tebrau) service will be terminated within six months after RTS Link begins operations on Jan 1, 2027,' Johor's Works, Transport, Infrastructure, and Communications Committee chairman Mohamad Fazli Mohamad Salle h was quoted by local media outlet Harian Metro as saying in a June 24 report. Operated by Keretapi Tanah Melayu Berhad , Shuttle Tebrau began transporting passengers between Singapore and Malaysia in July 2015 . A ticket for the five-minute journey into Singapore costs RM5 ($1.50) , and $5 into Malaysia . 'With a track length of 1.1km, this service is capable of carrying 8,635 passengers per day with a frequency of 31 trips in both directions,' Mr Fazli reportedly said. Th e new 4km RTS Link , which will connect travellers between between Woodlands North in Singapore and Bukit Chagar in Johor in five minutes, is scheduled for completion by December 2026 and expected to be operational in early 2027 . The fare for the rail link has yet to be announced, but will be set by the operator closer to the completion of the project. RTS Operation s is a joint venture between Singapore rail operator SMRT and Malaysian public transport firm Prasarana . When ready, the RTS Link will be able to carry up to 10,000 peop le per hour in each direction. Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
22 minutes ago
- Straits Times
China urges Philippine military to refrain from ‘malicious accusations' over drugs trade
'China has the toughest resolve and policy against drugs and we have one of the best counternarcotics track records in the world,' the Chinese embassy said. PHOTO: REUTERS China urges Philippine military to refrain from 'malicious accusations' over drugs trade HONG KONG – The Chinese embassy in the Philippines on June 26 urged 'certain individuals within the Philippine military' to refrain from 'malicious accusations' after a Philippine military spokesman linked China to a recent influx of drugs. 'It is not far-fetched that this be another effort of the Chinese Communist Party to destroy the future generation of Filipinos by flooding our country with illicit drugs,' Navy spokesman Rear-Admiral Roy Vincent Trinidad told reporters on June 24. 'China has the toughest resolve and policy against drugs and we have one of the best counternarcotics track records in the world,' the Chinese embassy said. 'We firmly oppose the baseless and malicious accusations made by certain individuals with intention to smear China,' it added. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
29 minutes ago
- Straits Times
Thai and Cambodian leaders visit disputed border as tensions simmer
FILE PHOTO: Thailand's Prime Minister Paetongtarn Shinawatra looks during a press conference in Bangkok, Thailand, June 23, 2025. Government House of Thailand Handout via REUTERS/File Photo ARANYAPRATHET, Thailand - The leaders of Thailand and Cambodia are visiting different parts of their disputed land border on Thursday as tensions between the two neighbours simmer over a territorial dispute and the Thai government teeters on the brink of collapse. The deterioration of relations was sparked by brief armed clashes in a border area late last month that left one Cambodian soldier dead. What followed were a series of tit-for-tat measures by both countries including troops mobilisations, Cambodia's suspension of all fuel and gas imports from its neighbour, and the partial closure of checkpoints by Thailand along the 817 km (508 miles) land border. The conflict has added fuel to a crisis facing Thai Prime Minister Paetongtarn Shinawatra, who is battling to revive a faltering economy and scrambling to keep a fragile coalition together in the face of protests as well as a parliamentary no confidence vote. As she arrived on Thursday morning at the Thai bordertown of Aranyaprathet in Sa Kaeo province, opposite Cambodia's Poipet, Paetongtarn was greeted by a crowd of supporters, with several of them holding a large sign saying "Love You Prime Minister Paetongtarn". The Prime Minister said the purpose of her visit was to survey the ongoing crackdown on transnational crime and gauge the impact of border restrictions, which saw Thailand halting all vehicles, tourists and traders from all land border crossings into Cambodia. "We want to see the impact from this policy and what the government can do to help, this is our main goal for the visit today," Paetongtarn said in a meeting with officials. The Thai Prime Minister earlier this week linked the proliferation of illegal online scam centres to Cambodia, but Cambodian authorities have denied involvement. At another part of the border, former Cambodian premier Hun Sen on Thursday morning visited troops and officials in Oddar Meanchey province, opposite the Thai province of Surin. Local media footage showed Hun Sen, in military fatigues, arriving by helicopter and meeting with officials in the area. The two leaders has until recently enjoyed warm personal ties, helped by the close relationship between Hun Sen and Paetongtarn's influential father, Thailand's former premier Thaksin Shinawatra. But in a leaked phone conversation with Hun Sen, Paetongtarn was heard denigrating a Thai military commander - a red line in a country in which the military holds significant clout - piling political pressure on the Thai government. The prime minister has since apologised over the leaked call but the incident was used as a justification by the Bhumjaithai party to leave the government coalition last week. Bhumjaithai said earlier this week that it will seek a parliamentary no confidence vote against Prime Minister Paetongtarn and her cabinet over the leaked call. Paetongtarn is also facing judicial scrutiny after a group of senators gave the Constitutional Court and a national anti-graft body a wide remit to investigate her conduct. Decisions from either bodies could lead to her removal. Anti-government groups are also planning a street protest starting Saturday, demanding her resignation. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
