The Issue Of Brazilian Fiscal Discipline Essay

The Issue Of Brazilian Fiscal Discipline Essay

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Brazil has introduced an austerity measure, which is called PEC 55, that makes the inflation adjusted social expenditure constant for the next 20 years. Temer claimed that the spending cap was a must because of the recession, which is caused by the failure of the earlier leftists government in controling government expenditures, Brazil passes through. Fiscal discipline has become a common tool for dealing with a recession in neoliberal era as a result of the popularization of market-oriented policies. Countries like Greece and Singapure has also adopted austerity measures but what make Brazil’s case special is its longetivity, which is twenty years. The spending cap is accused to be ‘’the most socially regressive in the world’’(The Guardian) and ‘’the mother of all austerity plans’’ (The Washington Post).

This prolonged austerity plan poses a danger for the democratic governance of the state because democracy, in a most minimalist sense, needs free, fair and competitive elections and competitivity of elections cannot be guaranteed under PEC 55. To put it more explicitly, some parties for who social spending is essential for making promises may be marginalized from political sphere as a result of the freezed social policy. Moreover, the participatiory power of citizens to the policy making process will be also limited or altered because after a while people will interiorise the system and they may contunie to not demand more social spending even after the plan expire. Freezing social spending may create a conscious and normalize the cap over years. People may look for other ways to alter the sytem rather than questioning it. Additionally, austerity plans are genereally justified by claims like that social governments take from wo...


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...stem to a more progressive one may help the government to balance retrogressive effects of the PEC 55. Thus, government should increase the wealth, corporate and income taxes while reducing consumption taxes to decrease income inequality. Lesser taxation for everyone, specifically for the low income level, may lessen the burden caused by the fall in social income. Governments can provide tax exemptions or reductions for families in tandem with their income levels while considering the education and health services they used. Moreover, government can also ensure tax incentives for private investors who provide some amount of every service for free.
Yet, uncontrolled and unplanned tax reductions may lead further budget deficits so governments should check their accounts in every step they take to be able to save the democracy and the people for the next twenty years.

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