Senate approves base text of package that provides for savings of up to R$60 billion

After nearly four hours of voting, the Senate approved on Thursday (12) the base text of the government's fiscal adjustment bill, by 45 votes to 31. The proposal includes measures to reduce spending and increase revenue, with estimated savings of between R$ 50 billion and R$ 60 billion in 2027, according to Minister Bruno Moretti. The highlights will still be analyzed, probably on Tuesday (17). After that, the bill will move on to the Chamber of Deputies. Benefit cuts The text provides for a linear 10% reduction in tax benefits, in addition to the cut approved at the end of 2025. The measure could represent a reduction of up to 20% from the original amounts. Among the exceptions are benefits related to payroll, the information technology sector, semiconductors, and the vehicle tax exemption for people with disabilities and autistic people. Spending cap The bill also reduces the spending growth cap in years when fiscal containment mechanisms are triggered from 2.5% to 2% above inflation. Other changes include: Restrictions on the use of tax credits when spending is blocked; The possibility of blocking spending to meet the midpoint of the fiscal target; Authorization to use part of the unused balances of public funds for constitutional expenditures, with essential areas preserved. Health and supersalaries The proposal removes extraordinary revenues from oil exports from the calculation of the federal health spending floor until 2030. The text also sets a 120-day deadline for Congress to regulate payments above the civil service salary cap, currently R$ 46.3 thousand. Diesel subsidy The package also provides for a fiscal flexibility measure for expenses related to stabilizing diesel prices. The government may exclude up to R$ 10.5 billion in extraordinary spending on economic subsidies for fuel producers and importers from the calculation of the 2026 fiscal target. The justification is the impact of the war in the Middle East on international oil and fuel prices. The measure does not eliminate the expenses from public accounts, but allows the amounts to be disregarded in the calculation of compliance with the fiscal target. Political dispute The vote was marked by criticism from the opposition, led by Senator Rogério Marinho (PL-RN), who questioned the speed of the legislative process and described the proposal as a kind of tax increase. Even so, the urgency motion was approved by 40 votes to 38, allowing the text to be analyzed directly by the full chamber. The rapporteur, Eduardo Braga (MDB-AM), defended the text and stated that the proposal received contributions from lawmakers, with approximately 50 amendments incorporated during the drafting of the report. The government maintains that the package is necessary to contain spending growth, increase revenue, and open up room in the 2027 budget to meet the primary surplus target of 0.5% of Gross Domestic Product (GDP), equivalent to R$ 73.2 billion. The proposal, however, does not make structural changes to mandatory spending protected by the Constitution, such as pension benefits. The discussion takes place amid concern over the trajectory of Brazil's public debt, estimated at R$ 11.1 trillion, equivalent to approximately 83% of Gross Domestic Product (GDP).