BRASILIA (Reuters) -Brazil's lower house of Congress removed a proposal to overhaul taxation on investments from its voting agenda, in a blow to the government's plans to boost public revenue with the measure, as it is set to expire if not voted on Wednesday.
Lawmakers voted 251 to 193 on Wednesday evening to remove the proposal from their agenda. It would still have needed Senate approval.
"The lower house's decision...is not a defeat imposed on the government, but on the Brazilian people," President Luiz Inacio Lula da Silva said in a post on X.
The government had initially expected to raise 20.9 billion reais ($3.92 billion) in additional revenue next year from the measure to help meet its fiscal target.
The proposal included changes such as the increase of tax on interest on equity payments and the unification of the income tax rate on financial investments.
Lawmakers had already revised the initial proposal with the government's backing to trim projected revenue gains next year to around 17 billion reais.
Government officials had emphasized that the measure was key to supporting the fiscal goal of a 0.25% primary budget surplus next year.
Finance Minister Fernando Haddad told journalists earlier in the day that the government would keep pursuing its current targets for public accounts, even if the measure ended up being not approved by Congress.
($1 = 5.3350 reais)
(Reporting by Ricardo Brito and Marcela Ayres in Brasilia; additional reporting by Victor Borges; Editing by Kylie Madry)
