Brazil’s President to Discuss Credit and Billionaire Taxation with Bankers

At the start of the month, we reported on Brazil’s sports betting industry facing a potential ban unless proper regulations addressing the potential harms of gambling were not addressed, as warned by President Luiz Inacio Lula da Silva. 

The country that made betting on sports legal in 2018 never reached the point of also officially launching its betting market because of lawmakers’ failure to set up the necessary regulations.

All this is about to change in January 2025, the scheduled date for the launch of the market. In this context, Brazil, the country that initiated a crackdown plan aimed at illegal gambling, still has a few other burning issues to clarify, including the way its billionaires should be taxed and the situation of bank credits. 

All these along with other important financial matters will be discussed during a meeting that President Lula is going to have with the chief executive officers of the main banks in the country. 

Scheduled for Wednesday morning (October 16), the meeting will be held at the Planalto Palace, a location that will host representatives of the Brazilian Federation of Banks (FEBRABAN), as well as Bradesco, Itaú Unibanco, BTG Pactual, Santander, and Banco Safra.

“Victory” for Finance Minister Haddad

According to information from insiders, the meeting is regarded as a “victory” by Finance Minister Fernando Haddad, who played a key role in facilitating communication between President Lula and the banking sector. 

Haddad recently proposed a tax targeting millionaires, specifically those earning more than R$1 million ($175,000) annually. 

This proposal is part of a broader set of measures the government is considering, which also includes exempting individuals earning up to R$5,000 ($878) per month from income tax. 

While the millionaire tax has garnered significant attention, it remains one of several scenarios being considered by the administration.

Sports Betting Market and Tax Reform Regulations

Other important issues expected to be discussed during the meeting are the regulation of the sports betting market and the tax reform. 

The government has already held discussions on this topic, including measures to protect vulnerable populations, such as cash-transfer Bolsa Família recipients, from falling into debt through betting platforms. 

During a recent meeting, there was talk of potentially restricting Bolsa Família beneficiaries from placing bets. 

However, the Ministry of Finance’s executive secretary, Dario Durigan, clarified that no immediate action will be taken to block the use of Bolsa Família cards for betting. 

He also noted that this week, the government plans to block around 2,000 betting websites not included on its approved list.

Tax reform regulation with special emphasis on Deferred Tax Credits (DTAs) is also on the meeting’s agenda. 

Special emphasis is expected to be put on banks that hold large volumes. 

The Lula administration is closely monitoring this issue, aiming to see tax reform regulation approved by Congress in 2024. 

Alexandre Padilha, Minister of the Secretariat for Institutional Relations, recently expressed the government’s optimism, stating they should have another meeting this week on the same topic of tax reform with the rapporteur Eduardo Braga. 

Padilha emphasized the government was “optimistic about the possibility of concluding the tax reform vote this year,” which he described as “an important gesture.”

Despite the administration’s hopes, there is a risk of delay. A behind-the-scenes struggle between the Lower House and the Senate could push the review of the tax reform into 2025.

Some senators are reportedly aiming to postpone the decision to prevent House Speaker Arthur Lira, who will leave office in February, from taking credit for the final outcome.