Local rivalry could give Lula income tax boost ahead of 2026 elections

An ambitious bill in Congress seeking to alter Brazil’s income tax thresholds has set off a high-stakes clash between the two most powerful politicians in the northeastern state of Alagoas. As the saying goes, “all politics is local.”

Senator Renan Calheiros, a seasoned political veteran who chairs the Senate Economic Affairs Committee, has taken it upon himself to champion the government’s proposal to exempt workers who earn up to BRL 5,000 a month from paying income tax.

Calheiros this week revived a dormant 2019 bill, vowing to align it with Lula’s proposal. In doing so, the senator is seeking to brush aside the work of Congressman Arthur Lira, his longtime rival. An influential former speaker, Lira is the proposal’s rapporteur in the House.