Overview

• Both chambers of Congress overturned Lula’s May decree to raise the financial transactions tax, marking the first nullification of a presidential decree since 1992.
• The measure aimed to generate about 61.5 billion reais through 2026 by taxing corporate loans, foreign-exchange operations and private pension transactions.
• Brazil’s solicitor general’s office has begun technical reviews at President Lula’s request to assess the constitutionality of Congress’s reversal.
• Finance Minister Fernando Haddad has signaled options including a Supreme Court appeal, new revenue sources or deeper budget cuts.
• The decision underscores Lula’s weak congressional majority and lawmakers’ refusal to approve additional spending without strict cost-control measures.