Alckmin Defends IOF Tax as Brazil Faces R$20 Billion Deficit

Brazil's Vice President Geraldo Alckmin Defends IOF Tax Amidst Congressional Opposition Brazil's Vice President, Geraldo Alckmin, firmly defended the government's decision to maintain the IOF tax on May 30, 2025. His statement aligns with the position of the Ministry of Finance, emphasizing the tax's role in maintaining fiscal stability within the country. Alckmin's comments come at a critical juncture, as Congress is poised to challenge the decree in June. The government, however, maintains that no alternative measures can effectively address the projected R$20 billion budget deficit for 2025. "The measure is essential for fiscal equilibrium," Alckmin stated, adding that the tax increase helps prevent further increases in the Selic interest rate, currently at 14.75%, and may even hasten its decline. The government's insistence on maintaining the IOF tax underscores the severity of the fiscal challenges facing Brazil. The economic team's assessment that structural reforms are insufficient to bridge the substantial budget gap highlights the urgency of the situation. The coming weeks will be crucial as Congress weighs its options and the government navigates the political pressure surrounding this controversial tax. The situation remains tense, with the potential for significant economic and political ramifications depending on the outcome of the congressional challenge. The government's commitment to fiscal responsibility and its strategy for addressing the budget deficit will be closely scrutinized in the days and weeks ahead.