Amendments and Dino are decisive for the government's defeat in Congress on the IOF decree

The government's defeat in the vote on the bill that suspends the increase in the Tax on Financial Transactions (IOF) , which took place this Wednesday (25), is seen as a result of the imbroglio involving the release of parliamentary amendments and the alliance between the Executive and the Supreme Federal Court (STF) on this issue. The text that overturned the government's decree was approved by the Chamber of Deputies with 383 votes in favor and 98 against.

After approval in the Chamber, the proposal was forwarded and approved in the Federal Senate. The text was cited symbolically, when it is not necessary to record votes. Only the PT bench and Senator Weverton (PDT) voted against.

For political scientist Adriano Cerqueira, a professor at Ibmec in Belo Horizonte, the federal government is facing a deep crisis, marked by low popularity, difficulties in political articulation and loss of international prestige. According to him, Congress's reaction to the proposal to increase the IOF is a direct reflection of this scenario.

"The government is in a terrible crisis. Its popularity is very low and it has no international prestige," he said. Cerqueira highlighted that political coordination, especially in the Chamber of Deputies, is far from what was expected. "The government depends a lot on these extra resources to try to close the fiscal year in a less embarrassing way," he explained.

Cerqueira also pointed out that the government's strategy of pressuring members of parliament through amendments is not having any effect. "This strategy of trying to financially suffocate members of parliament with the issue of amendments is not working," he said. For him, the parties are more independent, with access to party and electoral funds, and are no longer content with positions: "They are really after power, including at the federal level, and they know how to respond accordingly."

Dissatisfaction among parliamentarians and the crisis over amendments lead to a vote against the IOF decree in Congress

Motta had announced the call for this vote in the early hours of Wednesday (25), in a publication in "X". The report was delivered to deputy Coronel Chrisóstomo (PL-RO). The action took the government by surprise.

On June 16, the deputies approved, by 346 votes to 97, the request for urgency for the Legislative Decree Project (PDL) that overturned the measure of the government of Luiz Inácio Lula da Silva (PT). Motta called for urgency after the Executive published a provisional measure that increased taxes and a decree that revoked part of the IOF adjustment, but not the entirety. There was dissatisfaction in Congress with the measure.

The Speaker of the House, Hugo Motta (Republicans-PB), worked in favor of maintaining the measure, but congressmen were irritated by the delay in releasing the amendments, which forced Motta to pressure the Planalto Palace.

The government, on the other hand, defends itself against the allegations by stating that in 2025 the funds were released more quickly. According to the Secretariat of Institutional Relations (SRI), in the 50 business days after the Budget was approved, the government paid R$408 million this year in amendments, equivalent to 1.78% of the total. Last year, the same period saw 0.35% of amendments released, and in 2023, 0.61%. See below the data released by the secretariat.

Before Motta's decision, the Planalto Palace had committed, on Monday (23), R$897.7 million in parliamentary amendments, a value that rose to R$1.72 billion on Tuesday (24). The amount, however, was not enough to guarantee a turnaround for President Luiz Inácio Lula da Silva (PT).

In the wake of the numbers, Minister Gleisi Hoffmann, from SRI, even stated that the repeal of the IOF decree could affect the release of amendments. "The repeal of this measure would require new blockages and contingencies in the Budget, harming social programs and important investments for the country, even affecting the execution of parliamentary amendments. It is time to think first about the country, which needs to continue growing and seeking social and tax justice", said Gleisi on social media.

Alliance between government and Dino over amendments irritates Congress

In addition to the pace of approval of the amendments, members of parliament are dissatisfied with what they call the alliance between the Executive Branch and Supreme Court Justice Flávio Dino. On June 10, Dino demanded explanations from the Chamber of Deputies about the allocation of funds from part of the parliamentary amendments after the Associação Contas Abertas, Transparência Brasil and Transparência Internacional Brasil pointed out irregularities.

According to the entities, there would be a new method of allocating committee and bench amendments, for which the Legislature would have approximately R$8.5 billion available in the Federal Budget. To make the execution of these amendments viable, the payment identification code would have been changed in order to "circumvent" the transparency and traceability requirements imposed by the STF.

Dino's request angered Congress, which saw the minister's action as a move to favor the Lula government and delay the payment of funds. As the minister was appointed to the position by the current president,

On Friday (27), Motta and Alcolumbre are expected to meet with Dino to discuss the mandatory amendments. The minister is the rapporteur of a Direct Action of Unconstitutionality that investigates the lack of transparency and traceability in parliamentary amendments.

Since August 2024, Dino has been blocking the implementation of the amendments. Initially, he blocked the so-called "PIX amendments", a special resource that is transferred from the ministry directly to the location indicated by the parliamentarian. The minister authorized transfers of this type only for ongoing works and public calamities.

In the same month, he also suspended the payment of mandatory amendments after the PSOL party questioned the constitutionality of the mandatory execution of individual and bench parliamentary amendments. The funds were only released in December, when Dino ordered the Office of the Comptroller General (CGU) to audit the transfers. This year, the judge also blocked amendments for the Health and federal universities sectors.

Opposition celebrates government defeat over IOF decree

Opposition lawmakers celebrated the overturn of the decree that increased the IOF and classified the decision as a direct response to what they call fiscal abuses by the Lula government. For them, the victory represents a milestone in the resistance against the increase in the tax burden.

"This victory is for the Brazilian people, who said enough is enough to the disguised confiscation promoted by the PT government," declared Congressman Luciano Zucco (PL-RS), leader of the opposition in the Chamber of Deputies. He criticized President Lula's stance, stating that he "preferred to confront Congress and, above all, confront the people." According to Zucco, the result of the vote is a clear message: "The time for submission is over."

Senator Tereza Cristina (PP-MS) also celebrated the decision and reinforced the impact of the tax on daily life. "Enough taxes! […] The population cannot pay the bill for the government's fiscal incompetence!", said the senator on social media, promising that the Senate will confirm the Chamber's decision.

Congresswoman Bia Kicis (PL-DF) highlighted the impressive result of the vote. "A victory for Brazil! With a score of 383x98, we managed to overturn the Lula government's decree to increase the IOF", she celebrated on the social network X.

The Parliamentary Front for Agriculture also spoke out about the vote in Congress and said that "more taxes mean more costs for those who produce, those who consume, and for those who are already feeling the weight of inflation in the market. It is no longer possible to push the bill onto the people. This victory shows that it is possible to have fiscal responsibility without further punishing the Brazilian's pockets. We remain vigilant and demanding: fewer taxes, more efficiency", said the entity on the same social network.

Congresswoman Carol de Toni (PL-SC) stated that the Legislature did what the population expected by overturning the decree that increased the IOF. "Today, Congress did what the people expected: it reacted. For the real Brazil, which pays the bill for all of this. And this victory is just the beginning. Every time the government tries to run roughshod over the population, it will not succeed. As long as they try to suffocate the economy, we will be here to defend those who carry the country on their backs," said the parliamentarian.

Congress serves the productive sector by reducing IOF

Market irritation also served as an element of pressure from Congress against the Planalto Palace, since the IOF is not a tax collection. In an open letter published on the 12th, the Parliamentary Front for Agriculture (FPA), led by congressman Pedro Lupion (PP-PR), highlighted that the increase in the IOF impacts the productive sector as a all.

“The increase in IOF on international remittances also worsens the situation. The charge affects biotechnology royalties, transactions between trading companies and parent companies, food franchises and logistics chains, creating new costs in practically all links in the agricultural sector. The impact is direct on rural producers and on the entire agro-industrial chain, compromising domestic supply and Brazil's competitiveness abroad,” the entity said in a statement.

Before the vote on the PDL, congressman Joaquim Passarinho (PL-PA) said that the problem is not just the tax itself, but the timing and the impact on the population. "The government seems to have not yet realized [...] that what the Chamber and the population are reacting to is not the increase in the IOF itself [...] It is the increase in tax, the increase in the tax burden. We cannot stand the increase in the tax burden any longer," said the congressman.

According to him, the tax directly affects the poorest, even if indirectly. "Everything they buy, everything that arrives on their table, has gone through some kind of financial transaction. If this IOF increases, the value of things, of food, even their daily bread, increases," he concluded.

Government blames Congress for lack of revenue

Another factor that motivated the members of Congress to move forward with the project was the interview given by the Finance Minister, Fernando Haddad, to Record , in which he once again defended the IOF measure as a social justice policy that would only affect “those living in the penthouse.” The statement was not well received behind the scenes in the Centrão, as it portrays the government as the “defender of the poorest,” while Congress would be the “defender of the richest” in this narrative created by the government.

Already anticipating defeat in the Chamber, the government sought to intensify the narrative in the House Plenary. During the discussion of the request that the PDL be removed from the agenda, Congresswoman Érica Kokay (PT-DF) said that there is a deliberate attempt to block any progress towards tax justice.

"There is an attempt being made to prevent the taxation of the rich in this country, of the rich," said the parliamentarian. For her, the PDL approved in the Chamber is an attempt to protect large fortunes. "What we see here is an attempt to protect the large fortunes of the super-rich, of those who do not contribute to the country, although they earn a lot, at the expense of Brazil itself," she criticized.

In a press conference before the vote on the bill, this Wednesday, the PT leader in the House, congressman Lindbergh Farias (RJ), stated that the change in the IOF will force the government to allocate around R$12 billion from the Budget this year, directly affecting social areas.

“This will mean cuts to Minha Casa Minha Vida, education and health. The government made an effort to set aside R$30 billion, of which R$20 billion will be covered by the IOF. Without this, there is no alternative but to cut further,” he warned.