Public Expenditure within the Crisis: Will Compulsory Loanings and Taxes on Large Fortune be the Solution?

Abstract

Due to world health crisis, new demands are required and differentiated public policies have to be established. The possibility of establishing new public policies, such as compulsory loans and taxing large fortunes, is foregrounded by the constitution. Although during the elaboration of the 2020 Pluriannual Plan, Brazil was not prepared for these needs, the scenario is different in 2021. Issues are known, or rather, the need for more hospital beds and buying of vaccines, and introduced in the budget. Since the start of the pandemic, additional credit occurred to cover more urgent expenditure. One solution to mitigate the crisis has been compulsory loans. It is advantageous since in the case of public calamity there is no need to comply with previous issues. However, there is a need to restitution in the same way as it was expended. On the other hand, taxing great fortunes needs previous issues, albeit without restitution. There is the need to limit the generation factor of compulsory loans which in certain plans are similar to great fortunes. Which are the large fortunes and who will pay the tax? All new plans require a trial which consists of the implementation for a period, at low rates so that a flight of capital to low-tax country is avoided, and solves part of financial expenditure caused by the pandemic.