BRASILIA (Reuters) -Brazil's government expects to decide on Tuesday how to address a shortfall in its 2026 budget after a key revenue-raising measure expired without congressional approval, Finance Minister Fernando Haddad said.
The Finance Ministry and the office of the chief of staff are reviewing alternatives discussed with congressional leaders, Haddad told reporters as he arrived at the ministry.
"By early afternoon we should have a decision on what to do," he said.
The fiscal gap emerged after Congress let an executive order lapse without a vote.
The proposal aimed to help the government meet its 2026 primary surplus target of 0.25% of gross domestic product by overhauling investment taxation, raising levies on fintechs and online betting firms, and capping the use of tax credits by companies.
It also included tighter controls on the granting of certain social benefits. The government had estimated the measure would generate 14.8 billion reais in fiscal gains this year and 36.2 billion reais ($6.70 billion) in 2026.
But with many lawmakers resisting further tax hikes under leftist President Luiz Inacio Lula da Silva, the measure expired before being considered.
Amid the impasse, the government this week asked Congress to again delay a vote on the 2026 budget bill, which sets next year's fiscal target and was submitted in April. Lawmakers typically approve the bill by July.
"The executive measure that lapsed contained important provisions related to both primary spending and tax expenditures, so we need to rebalance the budget," Haddad said.
He previously signaled that the government could resubmit parts of the proposal, including limits on tax credits and higher taxes on betting firms.
($1 = 5.4039 reais)
(Reporting by Marcela Ayres, Editing by Franklin Paul)
