On November 28, 2024, Brazil's Finance Minister Fernando Haddad announced a series of government spending cuts aimed at achieving R$ 70 billion in savings over the next two years. During a nationwide broadcast, he outlined a proposal to exempt individuals earning up to R$ 5,000 per month from income tax, stating that this measure will be funded by increased taxes on those earning over R$ 50,000 monthly.
Haddad emphasized that the new tax policy will not negatively impact public finances, as it is designed to redistribute the tax burden more equitably. He described the initiative as part of the second phase of the tax reform, which follows the consumption tax reform enacted the previous year.
The minister also highlighted that these changes aim to alleviate the tax burden on lower and middle-income Brazilians, with a focus on correcting social inequalities. He noted that a significant portion of the population will no longer pay income tax or taxes on essential goods, including meat.
In addition to tax reforms, the proposed fiscal adjustments include establishing a minimum retirement age for military personnel and limiting pension transfers. Haddad remarked that these changes are necessary for achieving fairness within the military retirement system.
Furthermore, the adjustments will affect the eligibility criteria for the abono salarial, a benefit akin to a 14th salary, reducing the income threshold from two minimum wages to R$ 2,640. This amount will be adjusted for inflation in the coming years.