Brazil pushes sports betting tax hike to balance budget
Brazil’s federal government is in a decisive week for its 2025 fiscal agenda, pushing urgently for congressional approval of Provisional Measure (MP) 1303, which raises taxes on sports betting (“bets”) and financial investment products. The measure, seen as vital to rebalancing the 2025–2026 federal budget, faces mounting resistance from lawmakers and industry groups.
To secure passage before the October 8 expiration date, the administration has launched a political blitz involving ministers, party leaders and congressional allies described by local media as a coordinated “shock troop” to ensure the measure survives in both the Joint Committee and the plenary sessions of the Chamber of Deputies and the Senate.
Fiscal Lifeline Meets Political Resistance
Originally introduced in June 2025, MP 1303 aims to offset revenue losses from a scrapped presidential decree that had raised the Tax on Financial Transactions (IOF). The bill proposes to increase the sports betting tax from 12% to 18%, while also modifying tax rules for financial instruments such as Agribusiness Credit Bills (LCA), Real Estate Credit Bills (LCI), and Export Credit Bills (LCD).
The government believes the reform could recover billions in lost tax income without introducing broad new taxes. However, failing to pass the measure in time could derail Brazil’s fiscal consolidation plan and threaten investor confidence.
Pushback from Key Economic Sectors
Despite its fiscal importance, MP 1303 has sparked backlash across several sectors, including agribusiness, construction and finance.
The agribusiness caucus (FPA) warned that taxing LCAs could deter investment in Brazil’s vital agricultural exports. Construction leaders echoed similar concerns, arguing that taxing LCIs and LCDs could tighten liquidity and make real estate financing more costly.
Meanwhile, the sports betting industry cautions that an 18% tax rate could backfire, driving players to offshore or illegal sites ultimately reducing, not increasing, government revenues.
Negotiations to Ease the Blow
Congressman Carlos Zarattini (PT–SP), the bill’s rapporteur, has been negotiating with the Finance Ministry and private-sector representatives to soften the impact on investment markets. Zarattini said discussions were “progressing well,” suggesting possible reductions in tax rates for LCAs, LCIs and LCDs to preserve capital flows.
However, the government remains firm on the 18% sports betting tax, insisting it’s a fair contribution from an industry that has rapidly expanded in Brazil.
Final Countdown Before Deadline
The government’s task force is now working around the clock to push MP 1303 through committee approval on October 7, followed by rapid votes in both legislative chambers before the October 8 cutoff.
If the measure lapses, it will lose legal effect, forcing the administration to draft a new proposal a move that could unsettle markets and compromise Brazil’s short-term fiscal goals.
As the political drama unfolds, President Lula’s administration must balance two competing priorities: tightening fiscal discipline and protecting economic growth. The coming days will determine whether Brazil’s tax reform effort can survive the crossfire of politics and policy.
