BRASILIA, Sept 12 (Askume) – Brazilian President Luiz Inacio Lula da Silva has ordered a study to ensure that, by the end of 2026, monthly incomes do not exceed 5,000 reais ($880).
Haddad said in a radio interview that various options had been proposed to fulfill the left-wing leader’s campaign promises, including one that looked “promising” politically and economically.
Workers earning up to 2,824 reais per month (equivalent to twice the minimum wage) are exempt from income tax.
In the following year’s budget bill, Lula’s government proposed raising the minimum wage to 1,509 reais, but refused to extend an income tax break to people earning twice that amount.
The significant expansion of the tax-free limit is seen as a major fiscal challenge as it would lead to significant revenue loss, at a time when the government is struggling to signal a sustainable fiscal balance amid a sharp increase in some mandatory expenditures.
Haddad said the government is committed to rebalancing public accounts, which “will allow us to pursue a healthy monetary policy and reduce real interest rates over time.”
Regarding the Brazilian real, which has fallen nearly 14% against the U.S. dollar so far this year, Haddad said the Brazilian real is facing pressure from domestic and foreign challenges.
However, he expressed hope that the situation would improve from this month after the United States is expected to start easing monetary policy.
Haddad pointed out that monetary intervention can be carried out if necessary, although the central bank rarely uses this tool but it should do so with caution.
(1 USD = 5.6688 R$)
