Government may appeal to the Supreme Court to maintain the increase in IOF even after defeat in Congress

Finance Minister Fernando Haddad signaled that the government may appeal to the Federal Supreme Court (STF) to maintain the increase in the IOF that was overturned by Congress this Wednesday (25), both by opposition parliamentarians and by the government's own base.

The path to be taken is under discussion with President Luiz Inácio Lula da Silva (PT) this Thursday (26), and judicialization is one of the alternatives being studied by the government.

“We will now see what the president’s decision will be, which may be to question Congress’ decision. [...] In the opinion of government lawyers, who have had many victories in court, [the overturning of the decree] is blatantly unconstitutional. Since it is a legal prerogative, neither we should be offended when a veto is overturned nor can Congress be offended when a measure is considered by the Executive to be inconsistent with the constitutional text,” he said in an interview with Folha de S. Paulo .

The decision on the path to be taken by the government also includes seeking new sources of revenue or making further spending cuts. Among the measures to increase revenue, Haddad says, are dividends and oil, but he did not detail what they would be.

The cuts will have to be in the order of R$12 billion – in addition to the R$30 billion already earmarked – in resources for “health, education, Minha Casa Minha Vida, I don’t know if Congress wants that”, said the minister.

In the event of an appeal to the STF, Haddad states that he will await a statement from the Attorney General's Office of the National Treasury (PGFN) or the Attorney General's Office (AGU) that certifies that the legislative decree that overturned the IOF increase is unconstitutional.

“I am for the Constitution. And I think that Congress will also defend the Constitution. When the opposite happens, if the Executive usurps a power of the Legislative, Congress will defend itself,” he pointed out.

Despite the tense relationship with Congress, Haddad says that the “game” is still “favorable” to Brazil because the government has passed important economic measures in the first two years of Lula’s third term and that, otherwise, the country would be in a difficult situation.

“When you talk about defeat, it gives the impression that Congress did not collaborate with the government. In terms of victories and defeats, the game is in Brazil’s favor. Because if the game was not in the economy’s favor, you would see where the dollar, unemployment, and inflation were. You would lose control of the economy,” he added.

For him, Congress has been, “in most cases, sensitive to the government’s theses that we are advancing”.

Despite the optimism, the president of the Senate and Congress, Davi Alcolumbre (União-AP), threatened the government with putting more legislative decree projects to a vote if there is no better negotiation on the part of the government.

The harsh message was justified by the expressive result of the vote in both the Chamber and the Senate: 383 votes in the first and symbolic votes in the other on the same night, which is considered unusual in the dynamics of legislative activity. Normally, a project approved in one House takes days to reach the other.

“We cannot accept insults and aggressions against a legitimate action by Parliament. We have 500 PDLs being processed in the Chamber and more than 80 in the Senate. We voted on only one,” said Alcolumbre.