'Nikolas Ferreira Factor' influenced the government's quick decision-making on IOF

The Lula government's (PT) quick retreat regarding the controversy over the increase in the Tax on Financial Transactions, the IOF , had an important factor in the discussions at the Planalto Palace: the appointment of deputy Nikolas Ferreira (PL-MG), by Jair Bolsonaro 's party , to be “the face” of the opposition's reaction against the government's measure.

In addition to him, the party elected Congressman Zucco (PL-RS), leader of the opposition in the Chamber of Deputies, to be the most powerful voice against the tax increase. This Saturday the 24th, the Rio Grande do Sul native circulated a note in which he said that the adjustment “is a frontal attack against those who produce, against those who work and against those who dream of a better Brazil.”

Nikolas intends to wait for the government's measure to have repercussions before deciding whether to make another video attacking and inventing information on the subject. This was the case with the piece about the “Pix crisis” in January and about INSS fraud, which has so far had 137 million views.

The government's agility, under the responsibility of ministers Rui Costa (Civil House), Sidônio Palmeira (Communications Secretariat) andGleisi Hoffmann (Institutional Relations Secretariat), in deciding to backtrack was based on the fear that the communication crisis would become unavoidable.

Therefore, the Finance Minister,Fernando Haddad , decided and was urged to make a post on X regarding the revocation of part of the IOF adjustment decree. The retreat took place around 11:30 pm on Thursday 22.

The next morning, Haddad calmly explained the retreat. He stated that he had no problem correcting the course, as long as the government maintained the general direction of economic policy.

Understand the retreat

The partial withdrawal occurred after the negative reaction of the financial market to the increase in taxes on investments by Brazilian investment funds in assets abroad.

This rate was zero, but it would rise to 3.5% with the decree. Now, it is back to zero. The speech was that the government would unify at 3.5% the IOF for operations such as international credit and debit cards; international prepaid cards; remittance of funds abroad for investment; purchase of currency in cash; and short-term external loans.

With the first decree, the economic team, led by Haddad, projected to raise 20.1 billion reais this year. In practice, the ministry decided to restore a 2007 decree that provides for zero tax on transfers abroad related to investment fund investments in the international market.

The government also backed down on remittances of funds to Brazilian taxpayers' accounts abroad for investments, which will now remain at a rate of 1.1%. "It is an adjustment in the measure — made with balance, listening to the country, and correcting course whenever necessary," argued the Treasury.