Nibor Dooh

The PT of yesteryear gave us today’s tax exemptions

In a desperate bid to recover Lula’s dwindling popularity—or, as political scientist Carlos Pereira sees it, simply to retain its hegemonic grip on the left—the Workers’ Party (PT), and by extension the government itself, has resorted to the oldest trick in the book: inventing a “people’s enemy” and throwing more logs onto the fire of polarization. Although the official motto of the administration—soon to be tossed aside—remains “Unity and Reconstruction,” we should expect neither the first, nor therefore the second.

The rallying cry now is “rich versus poor,” particularly under the banner of so-called “tax justice.” What conveniently goes unmentioned, however, is the starring role played by previous PT administrations in building the very system they now find it so useful to brand as “unjust.”

Start with the spectacular expansion of tax exemptions. When Lula took office in 2003, tax expenditures—now painted as diabolical—stood at about 2% of GDP. By 2015, under Dilma Rousseff, they had more than doubled to 4.5% of GDP, a level we have proudly maintained ever since. The amount budgeted for 2026? A modest R$620 billion.

PT governments were especially generous when it came to tax breaks on financial investments. The 2004 Law 11,033 introduced tax-free Real Estate Credit Bills (LCIs)—a gift later extended in 2013 to Agribusiness Credit Bills (LCAs). That same year, Lula’s government also rolled out Agribusiness Receivables Certificates (CRAs)—wait for it—also tax-exempt. The same law granted the same perk to Real Estate Receivables Certificates (CRIs), around since 1997. And let’s not forget Law 12,431 of 2011, which gave us the tax-free “infrastructure debentures.” Another gift that keeps on giving.

These instruments are particularly enticing when indexed to the IPCA inflation index. Unlike Treasury bonds, they don’t raise your tax bill when inflation rises—always a looming risk. Unsurprisingly, investors have flocked to them, especially when default risk appears minimal. Even the Treasury itself is now complaining about unfair competition from the private sector.

The PT’s rap sheet when it comes to doling out tax privileges—whether on financial products or elsewhere—is nothing short of impressive.

So what should we realistically expect from this new round of “tax justice” initiatives aimed at fixing our fiscal woes—namely, an adjustment large enough to stop the public debt from growing faster than GDP (a trajectory that, small detail, happens to be unsustainable)?

Honestly? Absolutely nothing.

These proposals were never about that—not even close. After all, the scale of the adjustment required is on the order of 3 percentage points of GDP, or some R$375 billion, far beyond what these symbolic gestures could possibly achieve.

The real goal here—as noted earlier—is to inflame polarization in hopes that it somehow boosts Lula’s reelection prospects. The 2026 campaign started back in 2023, and if you hadn’t realized that yet, recent events should have cleared things up nicely.

Before condemning tax privileges, perhaps the government should flip through the Diário Oficial and recall who signed them into law in the first place.