Congress approves jabuti that allows amendments for defaulting cities and includes Redata in tax regimes

Deputies included a tortoise in the project that creates a loophole in the Fiscal Responsibility Law (LRF) and allows amendments to be sent to cities, even if they are in debt to the Union or lack transparency in public spending. The text was approved by senators.

🔎 Jabuti is a term used in the legislative process to designate an excerpt included in a bill that does not concern the initial theme of the text.

Originally, the LRF stipulates that, to receive fund transfers and amendments, Brazilian municipalities need to follow some fiscal rules. Among them, being up to date with your accounts and having carried out a transparent accounting of previously received resources.

However, the tortoise approved by the Chamber removes this rule for all cities with less than 65 thousand inhabitants. According to the National Confederation of Municipalities (CNM), this includes more than five thousand Brazilian cities, that is, 90% of the 5,569 Brazilian municipalities.

The tortoise was included in the project by the rapporteur, deputy Isnaldo Bulhões (MDB-AL). In plenary, he defended the change in the law.

"Those municipalities that are the smallest in the country, in every corner, from South to North, from North to Northeast, must have special treatment, because they increasingly want to improve, seek technical capacity, to comply with this type of requirement, which sometimes leads them, due to lack of compliance, for simple reasons, to not be able to receive some resources", said the deputy.

The change in the rule was criticized by deputy Gilson Marques (Novo-SC). For him, the change removes the need for fiscal responsibility from the law.

Despite criticism, the project was approved by a large majority. There were 364 votes in favor and 46 against, in addition to three abstentions.

Changing the rule for sending amendments to smaller cities has been a long-standing desire of Congress.

In the Budget Guidelines Law for 2026, parliamentarians had already included the exception for municipalities. President Luiz Inácio Lula da Silva (PT) even vetoed the section, but his veto was overturned.

Estudo mostra baixa relevância e transparência das emendas parlamentares individuais — Foto: Jornal Nacional/ Reprodução

Financing for Redata

Part of the reason the project was approved by a large majority is the need to change fiscal rules for financing the Special Taxation Regime for Datacenter Services (Redata).

Presented by the then deputy and current minister of the Institutional Relations Secretariat, José Guimarães, the text approved this Thursday (3) by the Chamber includes Redata in the list of regimes that do not need to respect the ceiling of 2% of GDP for tax benefits. Otherwise, it would make tax waiver unfeasible.

Redata is a policy to encourage the installation of data centers in Brazil. This type of installation brings together servers, storage systems and network equipment for large-volume data processing.

To encourage the sector, the government will give up receiving federal taxes. The government's estimate is a tax exemption of R$5.2 billion in 2026.