Brazil's lower house approves minimum wage rise

Brazil’s lower house approved a decree signed by President Luiz Inácio Lula da Silva to increase the minimum wage to 1,320 reais (US$270) from 1,302 reais and the individual taxation threshold from 1,903 reais to 2,640 reais.

The decree, signed in May, is expected to pass the senate without resistance.

The minimum wage rise should generate a budget impact of 18.1bn reais in 2024, 25.2bn reais in 2025 and 39.1bn reais in 2026, the lower house said in a statement.

"This lower house confirmation, mainly for the minimum wage increase, helps Lula see improvements of his short-term approval ratings, but this is limited as much of it was already felt since the salary increase in effect since May," André Pereira César, a political analyst at Hold Consultoria, told BNamericas.

According to a survey earlier this month by pollster Quaest, Lula's administration has 42% approval and 24% disapproval, while 29% consider it regular. A similar survey in June showed 37% approval and 27% disapproval.

TAX REFORM

Meanwhile, states are moving to maintain an aspect in the tax reform being debated in the senate and approved by the lower house that would allow them to impose taxes that affect mining, oil and gas projects and exports.

Under the reform, the ISS, ICMS, PIS, Cofins and IPI taxes will be combined into the federal CBS tax, goods and services tax IBS, collected by states and municipalities, and selective tax IS, imposed on goods and services harmful to health and environment.

Mining association Ibram is lobbying the senate to reverse the authorization, but the governors of Mato Grosso, Mato Grosso do Sul, Goiás and Pará are exerting influence, too.

The states want to use the extra revenues for infrastructure, senator Mauro Carvalho Júnior said during a meeting this week, his spokesperson told BNamericas. Carvalho Júnior was previously a high-level official in Mato Grosso.

"It will be very difficult for companies to revert this item of the law ... because governors have enormous influence on the decision of senators. Senate president Rodrigo Pacheco called a meeting with all governors to hear their appeals as part of the tax reform debate," said César.