On 20 May Brazil’s national confederation of municipalities (CNM) began its annual event in Brasília known as the ‘Marcha dos Prefeitos’ (mayors’ march), in which local mayors gather to present their demands to federal government authorities.
Analysis:
Over 10,000 local officials, such as mayors, deputy mayors, municipal secretaries, and city councillors, have come from towns and cities around the country and will stay in Brasília until 23 May to exert pressure on the government led by President Luiz Inácio Lula da Silva and on the national congress over issues such as tax breaks on payrolls. This had been a major source of tension between the branches of government in recent months, but the Lula administration and leading lawmakers, such as senate president Rodrigo Pacheco, have managed to negotiate a plan to gradually phase out tax breaks on payrolls for companies in 17 economic sectors and for public sector employees in municipal authorities. However, the mayors are weighing in on the debate and are likely to demand a more gradual reimposition of taxes on municipal payrolls.
- On 16 May Pacheco announced that congress had reached an agreement with the government to maintain tax reductions on municipal payrolls for the rest of 2024. The Lula government has agreed to continue the tax benefit, which was introduced in 2011 and lowered the payroll tax rate from 20% to 8%, but from 2025 onwards, the payroll tax rate will increase every year.
- In a press release, the CNM’s president, Paulo Ziulkoski, is cited as describing the maintenance of payroll tax breaks as a “fundamental” demand but added that this was just “the tip of the iceberg”. He also called on the federal government to review the social security contributions of municipal employees.
- Ziulkoski also highlighted the burden on municipal authorities caused by climate-related disasters, such as the severe floods currently devastating his native state of Rio Grande do Sul. The CNM estimates that natural disasters have cost municipalities throughout Brazil over R$32bn (US$6.27bn) in losses and damages in 2024 so far, and Ziulkoski called for more financial support from the federal government.
Looking Ahead: Lula is scheduled to give a speech at the Marcha dos Prefeitos today (21 May). Meanwhile, the senate is due to review the legislation to set the terms for phasing out the payroll tax breaks this week; it remains to be seen how much federal lawmakers will concede to the mayors.
