Brazil’s government proposed R$12.6 billion in federal tax-debt relief for about 3.6 million micro-entrepreneurs. President Luiz Inácio Lula da Silva unveiled the package 11 days before the presidential runoff. Congress now has the decision: lawmakers haven’t voted on the debt-cancellation bill, which requires an absolute majority. The government gave no vote date, asking only that Congress act urgently.
The package targets MEIs, or microempreendedor individual businesses, a simplified tax status for one-person businesses that pay a small fixed monthly tax slip. The Ministry of Entrepreneurship says about 3.6 million MEIs owe a combined R$12.6 billion in unpaid monthly tax slips. The report converted amounts at the Central Bank of Brazil’s PTAX rate of R$5.0096 per U.S. dollar on 13 October.
Congress Holds the Decision
The complementary bill would cancel federal tax debts owed by all MEIs. National Treasury attorneys collect those debts, often through court action, Finance Minister Dario Durigan said. “The conclusion of the technical staff is that this is debt that is largely unrecoverable,” he said, according to Exame.
Another bill would raise the annual MEI revenue ceiling from R$81,000 to R$110,000 in 2027 and R$140,000 in 2028. Lula asked Congress to fast-track it. Agência Brasil reported the proposed increase; Exame reported that the bill’s justification estimates a cost of about R$8 billion over three years. Congress must approve the increase.
A fifth measure is a decree confirming that MEIs don’t need to issue invoices on sales to private individuals. The base article doesn’t describe this measure as requiring a congressional vote, unlike the debt-relief and revenue-ceiling proposals.
Grant and Bank-Debt Proposals
The proposed one-off “Pix MEI” grant would provide up to R$5,000 per business for equipment and improvements. “It is not credit,” Entrepreneurship Minister Paulo Henrique Rodrigues Pereira said at the announcement. Planning Minister Bruno Moretti put the cost at R$5 billion over four years, with an estimated annual cost of about R$1.25 billion from 2027.
Electoral law bars the government from creating the grant program in 2026. It could start in 2027 if Lula wins. The government hasn’t published eligibility or verification rules.
The government also plans to use its Desenrola 3.0 program to buy MEI debts from banks, requiring discounts of at least 90%. Durigan said the government would buy loans from creditors offering the largest discounts first. Reports differed on the size of those bank debts, so the article provided no total.
Runoff Stakes and Public Finances
Lula, 80, leads the left-wing Workers’ Party (PT) and is seeking a fourth term. His rival, Flávio Bolsonaro, is a conservative Liberal Party (PL) senator for Rio de Janeiro and the eldest son of Jair Bolsonaro. Lula finished behind Flávio Bolsonaro in the first round and needs votes among small entrepreneurs, a group where he polls weakly, InfoMoney reported.
Lula told entrepreneurs, “We are going to help you get out of the squeeze,” according to Agência Brasil. He said entrepreneurs had raised demands behind the measures and that the government would turn them into bills and decrees. Brazilian outlets had reported no response from Flávio Bolsonaro to the package by Tuesday evening.
Pre-election spending promises can affect how investors judge Brazil’s public finances, the real and the interest rates that drive Brazilian bonds and stocks, the article said. The direct cost of debt forgiveness could be smaller than its headline value because the government considers much of the debt unrecoverable. Small businesses that clear their tax records could regain access to credit, potentially benefiting one-person suppliers such as repair shops and street vendors.
Betting markets showed Flávio Bolsonaro ahead, but those figures were bets, not polls, and could move quickly. Polymarket displayed Flávio Bolsonaro at 86.2% and Lula at 13.5%, with US$181 million traded. Kalshi showed Flávio Bolsonaro at 88% and Lula at 14% as of 13 October. The report also cited an earlier Polymarket snapshot of 86% for Flávio Bolsonaro and 13.5% for Lula, and a Kalshi snapshot of 88% and 14%, respectively. The market had drawn about US$181 million in total bets, including about US$385,000 in the previous 24 hours.