By Camilo Diniz
The Brazilian Senate on Thursday (Nov. 12) approved urgency for the Lula government's fiscal package by a razor-thin 40 to 38 vote in Brasília. The result is a warning sign for the Planalto Palace, the president's office: without a vote on the substance of the bill, the text stays stalled, and the government needs at least 41 senators to approve it.
A narrow vote that exposes a split in the government's base
The session was led by the Senate president, Davi Alcolumbre (União Brasil-AP). The margin was too tight for a government that wanted to turn the bill into a priority. The vote on the substance was pushed to next week, and the message is clear: the governing base has no slack to advance the economic agenda without surprises.
The bill was introduced on Wednesday (Nov. 11) by Senator Jaques Wagner (PT-BA), the government's leader in the Senate. Wagner belongs to the Workers' Party (PT), the party of President Luiz Inácio Lula da Silva. Rapporteur Eduardo Braga (MDB-AM) delivered his opinion on the text the same day. Government leaders and allies argued for speeding up the process.
The Liberal Party (PL), the PP, Republicanos and the PSDB instructed their senators to vote against urgency and asked for more time to examine the text.
What the 'Moretti plan' proposes
The package is nicknamed the "Moretti plan" after Bruno Moretti, Brazil's Planning and Budget minister. It promises a fiscal effort estimated at between R$ 46 billion and R$ 56 billion (Brazilian reais).
The proposal creates a floor for budget contingency (spending freezes) and opens the possibility of restricting mandatory spending, which is currently protected from blocks in the federal budget. In practice, the government wants to touch spending that today cannot easily be cut. The Planalto calls this giving the public accounts breathing room. For taxpayers, the reading is different: less predictability and more decision-making power for the economic team.
Tax credits: 'confiscation' for business
The most explosive point involves tax credits. These amounts, generated in operations such as the purchase of inputs, can be used by companies to offset taxes and contributions owed to the government. The text sets limits on that use, and representatives of the productive sector already call it confiscation. Pressure to remove the provision from the bill is strong and is reaching senators' offices directly.
Where the money would go
The government says the package gathers measures worth about R$ 11 billion, including postponing transfers under the Kandir Law (which compensates states for export tax exemptions) and limiting social security compensation. With that margin, it intends to fund the increase in Bolsa Família, the federal cash-transfer program, and the expansion of Pé-de-Meia, a student savings program.
However, the text mostly changes payment deadlines and compensation rules. It does not structurally change the trajectory of public spending.
Why it matters: a government under pressure
The political climate also weighs on the vote. Amid the crisis involving the Master case, the name of Jaques Wagner came under scrutiny. Lula defended his ally, saying: "People are innocent until proven otherwise."
Over the same period, a Datafolha poll showed 49% disapproval of the Lula government, against 50% the previous week, with approval rising to 48%. A government with nearly half the population disapproving of its performance has little room for error in the Senate.
What happens next
The initial expectation was an immediate vote on the substance, but disagreements blocked it. Now the Planalto must hunt for the 41 votes needed to unlock a text that affects companies' finances and the predictability of public accounts. Next week will be decisive, and the 40-38 tally already made clear that nothing is guaranteed.
VDD Analysis
Passing urgency by two votes is not a victory for a government that rules with ease. It is a sign that Congress sees the package as a patch, tending to push the bill onto the productive sector and taxpayers. More tax disguised as adjustment and more barriers to offsetting credits do not solve the structural problem of public accounts. Those who defend economic freedom and lower taxes should follow every line of the text next week.
