The Chamber of Deputies approved a request to speed up a legislative project and suspend the federal government’s decree to raise the Financial Transactions Tax. The urgency motion was passed with 346 votes in favor and 97 against during Monday’s plenary session. This means the proposal can be voted on directly in the Chamber without going through committee discussions.

The bill, known as Legislative Decree Project 314/25, was introduced by the opposition leader, Congressman Luciano Zucco. He criticized the administration’s lack of spending cuts and called the IOF increase unnecessary. “The government does not cut costs, it does not reduce ministries and positions of trust,” he said.

Deputy Marcel van Hattem also added that the IOF is a regulatory tool, not a revenue measure. “The IOF is a regulatory tax, not a revenue tax. That is why the Chamber will reject this decree,” he stated.

Support and Resistance Cross Party Lines

Although the proposal came from the opposition, some political parties such as PSD and Republicanos also voted in favor of the urgency. Their support shows concern across the political clime about how the Executive handles tax policy.

Still, main government figures defended the decree. Congressman José Guimarães, the government leader in the Chamber, said the Executive is following the rules of the fiscal standard approved in 2023. “We are making adjustments to comply with the framework voted by everyone. Our government has so much fiscal and social responsibility that it will not disregard the norms and rules of the law that we approved,” he said. 

Government Warns of Fiscal Impact

PT leader Lindbergh Farias warned that suspending the IOF increase would have an immediate impact. He said the government will need to cut spending by over R$12 billion if the decree were overturned.

Deputy government leader, Congresswoman Jandira Feghali, said the tax affects only a small group of high-income individuals. “We are discussing financial operations. This is not a problem for the vast majority of our people, but for those who have resources for financial operations in the country.”

PSOL leader Talíria Petrone said the tax targets wealthier groups and supports fairer fiscal policy. “You are against those on the upper floor paying the bill for the fiscal adjustment that you insist we must make,” she added.

What Comes Next

The IOF increase was first announced on May 22 but partially rolled back the same day after criticism from lawmakers and business leaders. On June 11, the government issued a revised decree with lower rates, plus a new provisional measure on investment taxation and planned spending cuts.

With the urgency motion approved, this bill can be brought to a vote in the Chamber during the upcoming plenary session.