Lula to discuss taxation of millionaires, gambling with bankers

According to insiders, the meeting is a “victory” for Finance Minister Fernando Haddad, who facilitated the communication for Mr. Lula to receive the bankers at the executive headquarters. One of the sources involved in these conversations admitted that, in addition to the credit issue, sensitive matters for the financial market, such as the taxation of millionaires, should also be discussed.

The proposal to tax millionaires was recently presented by Mr. Haddad and would target individuals earning more than R$1 million annually. However, the proposal is just one of four scenarios the federal government is considering exempting those earning up to R$5,000 monthly from income tax.

Another topic likely to be on the meeting’s agenda is the regulation of the sports betting market. The regulation of the sports betting market was the subject of a government meeting last week.

In the meeting, Mr. Lula and the ministers discussed, for example, the possibility of preventing cash-transfer program Bolsa Família recipients, a vulnerable group, from participating in bets, as they might be susceptible to indebtedness on these platforms.

However, after the meeting, the executive secretary of the Ministry of Finance, Dario Durigan, said that, for now, there will be no blocking of the Bolsa Família card for use in bets. The topic, he said, will be analyzed starting this week when about 2,000 betting URL addresses not on the positive list released by the government are expected to be blocked.

The meeting’s agenda also includes the topic of tax reform regulation. This is because banks currently maintain a high volume of Deferred Tax Credits, known as DTAs.

The matter has been closely monitored by the Lula administration because the Planalto Palace would like to see the regulation approved in Congress by 2024. This desire was recently expressed by the minister of the Secretariat for Institutional Relations, Alexandre Padilha.

“We should have another meeting this week on the regulation of the tax reform. The meeting will be with the rapporteur Eduardo Braga. I want to emphasize that the government is optimistic about the possibility of concluding the tax reform vote this year. Approval [of the tax reform regulation] this year is an important gesture,” said Mr. Padilha.

Mr. Padilha’s effort to push for the advancement of the tax reform regulation this year is related to a silent dispute between the Lower House and the Senate, which threatens to postpone the completion of the text to the next year, contrary to the government’s wishes.

This movement has been identified by government members, who privately admit the possibility of the review only occurring in 2025. The reason is that, behind the scenes, a group of senators is trying to prevent the deliberation from being finalized during the tenure of House Speaker Arthur Lira, who will leave office in February. The intention is to prevent him from taking credit for having delivered the final decision on the matter.