Lula Takes IOF Tax Fight to Brazil’s Supreme Court After Congressional Rebuff

39 posts • OpenAI (o3)

Updated Jul 2, 2025, 11:03 PM

Brazil’s government has asked the Supreme Federal Court to reinstate a presidential decree that raised the IOF tax on credit, insurance and foreign-exchange transactions. Congress overturned the measure on 25 June by 383 votes to 93 in the Chamber and in a symbolic vote in the Senate, scrapping a plan the Finance Ministry said would add roughly R$20 billion to 2025 revenue and R$76 billion through 2027.

In an action declaratória de constitucionalidade filed on 1 July, President Luiz Inácio Lula da Silva and Attorney-General Jorge Messias argue that the decree is within the executive’s tax-regulatory powers and promotes fiscal justice. The filing claims that blocking the higher IOF would force spending cuts and undermine social programmes.

Chief Justice Luís Roberto Barroso reassigned the case to Justice Alexandre de Moraes, who is already rapporteur for two related suits: an opposition petition by the PL seeking to void the tax increase and a PSOL challenge to Congress’s vote. The consolidation means Moraes will steer all rulings on the dispute.

The legal battle has heightened tension between branches of government. Lula said that resorting to the court is essential "to keep governing," while Finance Minister Fernando Haddad insisted the additional IOF revenue is critical to meeting the zero-deficit target for 2026. Senate President Davi Alcolumbre called the court appeal legitimate, but lawmakers allied to Chamber President Hugo Motta accuse the Planalto of bypassing the legislature. The Supreme Court has not set a timetable for judgment.

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#Brazil #Supreme Federal Court #Congress #Chamber #Senate #Finance Ministry #Jorge Messias #Luís Roberto Barroso #Alexandre de Moraes #PL #PSOL #Moraes #Lula #Fernando Haddad #Davi Alcolumbre #Hugo Motta #Planalto #Supreme Court

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Sources

brasil247.com(9)metropoles.com(8)g1.globo.com(8)revistaoeste.com(7)

Rádio BandNews FM

@radiobandnewsfm

Lula defends judicialization of the IOF: “Congress legislates, I govern”

Economia Estadão

@EstadaoEconomia

Haddad says he needs the IOF to meet the 2026 fiscal target and that he never shied away from dialogue. See what he said 👇

Estadão 🗞️

@Estadao

TENSION BETWEEN POWERS Haddad says he needs the IOF to meet the 2026 fiscal target and that he never shied away from dialogue 🔗 Read more on the Estadão website >