Haddad Plan yields results and revenue breaks historic record

Since the beginning of the Lula government, the Minister of Finance Fernando Haddad has been promoting tax collection as a solution for the Brazilian economy.

According to Haddad, the government is able to raise funds without going into debt and to invest in social programs and infrastructure projects through the organization of public accounts.

The proposal, considered orthodox, prioritizing goals such as a fiscal surplus and inflation below 3%, was harshly criticized by economists on the left, but accepted by the market and the government.

The tax reform proposed by Haddad is in its final stages, and new taxes, such as the taxation of exclusive funds, offshore companies, in addition to the increase in workers with a formal contract in Brazil, have helped the performance of public accounts.

March’s record

Proof of this is the record revenue achieved by Brazil in March 2024. It was R$190 billion, the best result for March since 1995.

The federal government collected 7.22% more than in the same period last year, according to the Federal Revenue in a statement published this Tuesday (23).

In February, growth was 12%.

In the first three months of the year, the federal government raised R$657.8 billion, a real increase of 8.36% compared to the same period in 2023. This result represents a new record for the first quarter and demonstrates the strength of Brazilian economy.

Increasing revenue is Fernando Haddad’s biggest bet in his tax framework, the new federal government spending ceiling.

Under the new rule, with more revenue, the government can expand its spending, which generates more jobs and income for the population.

How does the tax framework work?

The fiscal framework, also known as the Sustainable Fiscal Regime, is a set of rules and mechanisms that aim to control Brazil’s public debt. It was proposed by Fernando Haddad to replace the Spending Ceiling, a draconian measure criticized even by liberals and imposed during the Temer government.

The primary focus is to set a limit on the government’s deficit, which is the difference between revenue and expenditure. The objective is for the deficit to gradually decrease until a surplus primary result is reached, that is, when the government collects more than it spends.

The second is to set the spending limit. Under the new rule, you can spend up to 70% of the increase in revenue from the previous year, therefore, if revenue grew by 5%, the government can increase federal investments by up to 3.5%.