(Un)Constitutional Amendment No. 95/2016 and the Limit for Public Expenses in Brazil: Amendment or Dismemberment?

–Bárbara Mendonça Bertotti, LL.M candidate at the Pontifical Catholic University of Paraná, Curitiba, PR, Brazil

Origin and Objectives of the Amendment n. 95 to Brazilian Constitution

The Constitutional Amendment n. 95/2016 to the Brazilian Constitution was a result of a constitutional amendment bill proposed by the President of the Republic and approved by the Brazilian National Congress. The amendment provoked intense and strong social resistance, notably the student mobilization also known as “springtime”, that led to a series of demonstrations and occupations of high schools and universities. At least 22 of the 26 Brazilian States plus the Federal District had schools and universities occupied by the students. According to a survey carried out by the Brazilian Union of High School Students (UBES), 1,197 schools, institutes and universities were occupied.[1]

Despite this social movement, the government (without democratic legitimacy and unconcerned with its lack of popularity) defended its constitutional amendment bill, which was finally approved on December 16, 2016.

The amendment implemented a new tax regime with a limit on the expenses of the federal government for a period of twenty years. The new tax regime works this way: (i) the expenses of the federal government for 2017 are limited by the amount corresponding to the available budget for the expenses of 2016, plus the inflation rate in 2016; (ii) the expenses limit for 2018 will be fixed by the available budget of 2017, plus the inflation rate in 2017; (iii) and so on until 2036.

Exceptionally, for education and health, the budget for 2017 will be used as the base for the following years. Any changes to these rules can be made only starting in the tenth year and even then an amendment is possible only to the annual correction index. This measure aims to keep Brazil under a permanent state of economic exception.[2]

The new scheme does not allow any spending increase above the government’s rate of inflation, even if the economy is doing well. The case of Brazil differs from other countries that have imposed a ceiling on public spending, such as Holland, Finland, Sweden, Denmark, Japan, Bulgaria, Georgia and Singapore.[3] The main differences are the length of this measure (20 years), the correction of the spending ceiling fixed only by inflation, and the codification of the provision in the Constitution.

Impacts of this (Un)Constitutional Amendment to Brazilian Social Policies

It is possible to foresee some negative impact on Brazilian social policies, such as preventing investments that are necessary for the maintenance and expansion of public services, for advancing technological innovation, for increasing salaries, hiring and career opportunities, and for making other adaptations that are necessary to manage the country’s population growth. These impacts run directly counter to the Brazilian constituent project of implementing a model of Welfare state.[4]

Studies conducted by the Brazilian Institute of Research and Applied Economics (IPEA) on the right to health show that the Constitutional Amendment No. 95 created many problems, including de-linking expenditures on public health services from current net revenue, shrinking the available resources for health care, reducing public spending per capita on healthcare (from around R$ 519,00 per person in 2016, to an estimated R$ 411,00 per person in 2036 in the face of a doubled elderly population), and paying much less attention to the most vulnerable groups in Brazil–the ones that are fully dependent on the Public Health System.[5]

Critical Analysis: Constitutional Amendment or Dismemberment?

The Constitutional Amendment no. 95, currently in force in Brazil since December 2016, has five major problems.

First, it represents a constituent political project diametrically opposed to that of 1988, which provides for a Welfare State, centered on human dignity and on the fundamental rights and that requires State intervention for the reduction of the severe economic and social inequalities. In this sense, public investment is essential.

Second, it disrespects the political and constitutional design that was chosen by the people in presidential elections of 2014, and imposes a new tax regime different from the people’s expressed preferences.

Third, it offends the “clausulas petreas” (stone clauses), which are, according to paragraph 4 of article 60 of the Brazilian Constitution, subjects that cannot be changed by constitutional amendment (these include the federal form of State; the direct, secret, universal and periodic vote; the separation of powers; the individual rights and guarantees). The Constitutional Amendment no. 95 violates two of these: the federal form of State (tax changes influence the autonomy of the government) and fundamental rights (with a significant cutback on the country’s investments in social policies).[6]

Fourth, it removes from successor presidents autonomy in making a budget, and consequently removes from the Brazilian citizen the possibility to choose the Government from their priorities in investment policies.

Fifth, it establishes limits for the payment of interest and amortization of debt, it this generates two consequences: the money reserved for the payment of obligations undertaken by the Brazilian federal government prevents the expansion and undermines the capacity to maintain public policies; and the public debt might as a result increase considerably.

As a result, it is at least arguable that the new provisions of  Constitutional Amendment no. 95 violate the original constituent project and represent a serious setback on fundamental rights and human dignity, contrary to the immutable clauses of the Constitution.

Hence, in light of Richard Albert’s theory of constitutional change, it is possible to state that this change amounts to a constitutional dismemberment, not a constitutional amendment, because it represents a radical change that transforms the fundamental values of the Brazilian Federal Constitution.[7]

Also, according to Yaniv Roznai the change can be described as an unconstitutional modification to the Brazilian Constitution because it alters the Constitution’s basic principles, resulting in changing its very identity.[8]

Possible Alternatives to Return to the Status Quo Ante

There are different instruments in Brazilian Law that may correct the problems created by this constitutional change.

(1) Control of conventionality of this amendment: This is a type of control used to verify whether the domestic legal system is in accord with international commitments made by the country. It is possible to invalidate norms of domestic law that violate any international treaty ratified by the government and in force in that country.[9]

Brazil has ratified some Conventions, like the UN Convention on the Rights of Persons with Disabilities and the American Convention on Human Rights (Pact of San José, Costa Rica). The new tax regime authorizes the reduction of investments on social policies in violation of international commitments.

(2) Enactment of a new amendment. The current political situation is not hospitable to this option. Under to the Brazilian Constitution, a constitutional amendment bill can be proposed only by 1/3 of the members of the Chamber of Deputies or of the Federal Senate; the President of the Republic; or the Legislative Assemblies of the units of the Federation. Since the Constitutional Amendment no. 95 emerged from an amendment bill proposed by the President of the Republic and was approved by the Senate and the Chamber of Deputies (by a significant majority), a new amendment bill could hardly be approved (or even proposed).

(3) Judicial review of this unconstitutional constitutional amendment by the Brazilian Supreme Court. Even though it is not explicitly written in the Constitution,[10] this possibility has been recognized since 1993, “which is virtually an inherent power” of the court.[11]

Assuming the Court did invalidate this amendment, Brazil could in turn achieve a fiscal balance by reforming the current system of tax collection. For example, the Constitution authorizes a tax on large fortunes but no law implementing this provision has ever been enacted. The time may have come to do so.

Suggested Citation: Bárbara Mendonça Bertotti, (Un)Constitutional Amendment No. 95/2016 and the Limit for Public Expenses in Brazil: Amendment or Dismemberment?, Int’l J. Const. L. Blog, Aug. 24, 2018, at: http://www.iconnectblog.com/2018/08/unconstitutional-amendment-no-95-2016-and-the-limit-for-public-expenses-in-brazil-amendment-or-dismemberment

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[1] Brazilian Union of High School Students, 2016. Available on: <http://ubes.org.br/2016/ubes-divulga-lista-de-escolas-ocupadas-e-pautas-das-mobilizacoes/>. Accessed on: 20 dec. 2017.

[2] MARIANO, Cynara Monteiro. Emenda constitucional 95/2016 e o teto dos gastos públicos: Brasil de volta ao estado de exceção econômico e ao capitalismo do desastre. Revista de Investigações Constitucionais, Curitiba, vol. 4, n. 1, p. 259-281, jan./abr. 2017. p. 259. For a contrary point of view, see: VALLE, Vanice Regina Lírio do. Novo Regime Fiscal, autonomia financeira e separação de poderes: uma leitura em favor de sua constitucionalidade. Revista de Investigações Constitucionais, Curitiba, vol. 4, n. 1, p. 227-258, jan./abr. 2017.

[3] EL PAÍS, 2016. Available on: <https://brasil.elpais.com/brasil/2016/11/28/politica/1480332274_865460.html>. Accessed on: 20 dec. 2017.

[4] MARIANO, Cynara Monteiro. Emenda constitucional 95/2016 e o teto dos gastos públicos: Brasil de volta ao estado de exceção econômico e ao capitalismo do desastre. Revista de Investigações Constitucionais, Curitiba, vol. 4, n. 1, p. 259-281, jan./abr. 2017. p. 261.

[5] VIEIRA, Fabiola Sulpino; BENEVIDES, Rodrigo Pucci de Sá. Nota Técnica no 28. Os impactos do novo regime fiscal para o financiamento do Sistema Único de Saúde e para a efetivação do direito à saúde no Brasil. Institute of Research and Applied Economics. Brasília, 2016. Available on: <http://www.ipea.gov.br/portal/images/stories/PDFs/nota_tecnica/160920_nt_28_disoc.pdf>. Accessed on: 20 dec. 2017.

[6] ROZNAI, Yaniv; KREUZ, Letícia Regina Camargo. Conventionality control and Amendment 95/2016: a Brazilian case of unconstitutional constitutional amendment. Revista de Investigações Constitucionais, Curitiba, vol. 5, n. 2, p. 35-56, maio/ago. 2018.

[7] ALBERT, Richard. Constitutional Amendment and Dismemberment. Yale Journal of International Law, vol. 43, p. 1-84. 2018.

[8] ROZNAI, Yaniv. Unconstitutional Constitutional Amendments: A Study of the Nature and Limits of Constitutional Amendment Powers. A thesis submitted to the Department of Law of the London School of Economics for the degree of Doctor of Philosophy. London, 2014. Available at: <http://etheses.lse.ac.uk/915/1/Roznai_Unconstitutional-constitutional-amendments.pdf>. Accessed on: 24 dec. 2017.

[9] MAZZUOLI, Valerio de Oliveira. O controle jurisdicional da convencionalidade das leis. 4. ed. rev., atual. e ampl. São Paulo: Ed. RT, 2016.

[10] According to Brazilian Constitution of 1988, the Supreme Federal Court has the power to invalidate unconstitutional “federal or state law or normative acts” (article 102, I, a).

[11] SALGADO, Eneida Desiree. Brazilian Legislators at Work: Constitutional Amendments as Electoral Strategy. Election Law Journal. Vol. 16, Num. 2, 2017. p. 329.