Lula defends tax justice effort, aims for middle-class standard

On Wednesday, President Luiz Inácio Lula da Silva underscored the Federal Government’s commitment to establishing a more equitable tax system in Brazil. The administration aims to create a nation where the tax burden does not disproportionately affect workers while sparing the wealthiest segments.

In an interview with TV Bahia, Lula argued that adjustments to meet fiscal responsibility targets must not compromise social programs, the minimum wage valorization policy, and essential investments in health and education.

The Brazilian President defended the decree submitted to Congress by the Federal Government with adjustments to the Financial Transactions Tax (Imposto sobre Operações Financeiras/IOF). These adjustments aimed to curb capital flight and direct additional charges toward transactions primarily affecting wealthier sectors of society. However, the decree was overturned by deputies and senators. Consequently, the Federal Government, through the Attorney General’s Office, decided to appeal to the Supreme Federal Court for a ruling on the measure's constitutionality.

We are making a tax adjustment so that the wealthiest pay a little more, so we do not need to cut funding for education or health”

Luiz Inácio Lula da Silva, President of the Republic of Brazil

“The Brazilian government has the right to propose the Financial Transactions Tax (Imposto sobre Operações Financeiras/IOF), yes, and we are not proposing a tax increase. We are making a tax adjustment so that the wealthiest pay a little more, so we do not need to cut funding for education or health. There was pressure from the betting industry, there was pressure from fintech companies, and the concrete fact is that the interests of a few prevailed,” he said.

The President emphasized his openness to dialogue with the National Congress and intends to resume more direct conversations with the leaders of both Houses upon returning from commitments at the MERCOSUR Summit this Thursday in Buenos Aires and at the BRICS Summit next weekend in Rio de Janeiro.

“I am a man who is grateful to Congress. I am not someone who holds rivalries. Congress approved many things we wanted. But if I do not appeal to the Judiciary, if I do not go to the Supreme Court, I no longer govern the country. Congress legislates, and I govern,” the President said.

The President noted that he has already sent other bills to the Legislature aimed at standardizing rules on tax exemptions and relief for specific business sectors, proposing a more structural approach to implementing these adjustments.

“Do you know the proposal I made? That we cut 10% across the board from all tax benefits. Do you know how much exemption and tax relief there is in this country? It amounts to BRL 860 billion. We have to cut where there is excess fat, perform bariatric surgery on those who have excess fat. They will remain wealthy; they will still have benefits. Do they want me to cut benefits? To prevent minimum wage increases? No. We need to work to lead the country toward a middle-class standard,” he argued.

Along this path, the Federal Government submitted to Congress this year a bill that revises the Income Tax. Currently under discussion in the Legislature, this bill provides for a 100% exemption for those earning up to BRL 5,000. The Government also championed the approval of the tax reform, which ensures the elimination of taxation on basic food package items as of 2027.

Lula also celebrated the country’s exceptional economic moment, marked by the lowest unemployment rate in the historical series (6.2% in the quarter ending in May), more than one million formal jobs created in just the first five months of 2025, GDP growth above 3% in the first two years of his administration, and a declining dollar.

“I always say that this country has had two historic moments of social inclusion. There was Getúlio Vargas, who created the Consolidation of Labor Laws, who lifted workers out of fever and slavery and gave them a working day. And then during our government,” he concluded.