Dividend tax overhaul yields one-third of promised revenue as fiscal crisis deepens

The downward revision of projected dividend tax revenue — from an originally estimated R$29 billion to just R$10.5 billion in 2026, according to the Receita Federal — comes at a moment when the Ministry of Finance itself has just cut its GDP growth estimate from 2.3% to 2%, signaling that the Lula administration is facing a faster fiscal deterioration than markets had anticipated and that the probability of a new budget freeze has increased concretely.

The string of bad fiscal news is unfolding against a backdrop already weakened by monetary tightening. The Copom minutes, released this Tuesday, confirmed what analysts had been anticipating: the committee sees economic activity losing steam under the effect of high interest rates, with the Selic currently at 13.75%, and acknowledges that bank credit has decelerated, even as earmarked credit — real estate and corporate lines backed by guarantee funds — continues on an expansionary path. Bradesco, for its part, projects the Selic will retreat to 13.25% by year-end, in line with the market consensus captured by the Focus survey, which points to another cut at either the November or December meetings. Valor Econômico notes that the central bank kept that possibility "alive" by emphasizing the slowdown in activity in its minutes. For 2027, Focus projects GDP growth of just 1.43% — a figure that, combined with a Selic still in double digits, outlines a scenario of persistent financial tightening. Analysts at Valor warn that a significant share of the economy is already experiencing financial stress that aggregate GDP data has yet to fully capture.

The deterioration in federal revenues is not happening in a vacuum. The new dividend tax, which was meant to be one of the pillars of the government's fiscal consolidation effort, has generated less than a third of what was promised. At the same time, Brazilian industry recorded in September its lowest investment intentions since August 2020 — at the height of the pandemic — according to CNI's Industrial Survey, with electoral uncertainty ahead of the first-round presidential vote weighing on fixed capital decisions. On the external front, Brazil is preparing to formally challenge the United States at the WTO this Friday over tariffs that reach 37.5% for some sectors. Washington has already refused China's request to participate jointly in the consultations, a sign that the Sino-American trade dispute forms part of the backdrop to the bilateral negotiations. President Lula was even more explicit, stating that Brazil could invoke the Reciprocity Law if no agreement is reached — a rhetorical escalation with the potential to complicate already tense trade relations in an election year. The OECD, meanwhile, highlighted that Brazil and India were the countries hardest hit by U.S. tariffs, a finding that reinforces the commercial isolation Brasília is trying to reverse via the WTO.

A partial note of relief has come through the unexpected channel of tax cuts in the United States. After the U.S. Supreme Court declared Trump's tariffs illegal, Brazilian companies with operations in the country have begun to receive refunds that are boosting their bottom lines. Embraer booked R$358.6 million in the second quarter related to the recovery of import taxes; Taurus recognized R$91.1 million, and WEG may receive between R$170 million and R$230 million, according to J.P. Morgan estimates. Embraer, however, faced an operational crisis of a different nature this Tuesday: a global GPS system failure on the E195-E2 model grounded Azul aircraft and forced the rescheduling of more than 70 flights — an episode that exposes technical vulnerabilities in a platform that is the manufacturer's flagship in the regional jet market.

In the oil sector, the Foz do Amazonas basin is drawing growing attention. ExxonMobil declared it wants to participate in the "new chapter" of Brazilian oil in the region, where Petrobras recently found signs of hydrocarbons, while Chevron is taking its first steps in seismic research on the nine exploratory blocks it acquired at auction in 2025. The rush of international majors to the Amazon frontier represents a long-term bet that could redefine Brazil's export profile over the coming decade, but it also reignites the environmental debate in an election period. In the energy sector, the Ministry of Mines and Energy formalized the guidelines for the first natural gas auction from the Union's pre-salt reserves, offering 1.1 million cubic meters per day earmarked for five industrial segments — chemical, petrochemical, nitrogen fertilizers, steel and ceramics — with a target date of October 22.

The Caixa Econômica Federal strike is entering its 13th day without resolution. The institution has ruled out turning to the TST to end the conflict through collective bargaining arbitration, opting instead to pursue a negotiated agreement after bank employees rejected the latest proposal by 59.3% of votes. The stoppage is disrupting real estate credit operations, FGTS transactions and payments, at a moment when earmarked credit is precisely one of the few vectors of expansion identified by Copom itself. In the public sector, the government will have to directly assume management of the Malha Oeste railway after the impasse with Rumo over billions in remaining financial obligations from the concession contract that ended in June — yet another point of friction between the state and the private infrastructure sector. On the other hand, the failure of the Rondônia sanitation auction, which received no bids by the envelope submission deadline at B3, is a worrying signal for the universal sanitation program, whose progress depends precisely on attracting private capital to lower-return regions.

In the coming hours and days, markets will closely watch U.S. and European PMIs and speeches from Fed members — following last week's rate hike in the U.S. — which will influence the exchange rate and appetite for emerging market assets. Domestically, the query for the residual batch of income tax refunds, which will release R$1.265 billion to 412,000 taxpayers on the 30th, will inject some support into consumption. But the center of gravity of the economic news will remain fiscal deterioration: if the government fails to demonstrate the ability to rebuild revenues or credibly cut spending before year-end, pressure on the exchange rate — Focus already projects the dollar at R$5.20 at the end of 2026 and R$5.28 in 2027 — could intensify regardless of the Selic easing cycle.