Theme 21 of 43

Corruption, Administrative Misconduct & Public Oversight

More than half of the budget authorized by Congress never becomes real spending, and three parliamentary committees alone concentrate R$ 30 billion in earmarks.

Parliamentary earmarks registered by the Office of the Comptroller General, tax revenue by state published by the Federal Revenue Service, and administrative misconduct proceedings monitored by the National Council of Justice together form a map of how public money is decided, collected and, when misappropriated, eventually prosecuted. Cross-referencing who authorizes spending, who finances the State and who answers in court for mismanagement, a consistent pattern of power concentration and low effectiveness emerges.

Budget execution: how much is left in unpaid carryovers?

Year after year, the government commits far more than it actually disburses. In 2019, only 44% of the committed amount became liquidated spending; even in more recent years, with better execution rates, between 30% and 40% of the authorized budget still goes without full execution. That gap doesn't disappear — it accumulates as "restos a pagar" (unpaid carryovers), a spending reserve that can be used in following years without going through Congress's scrutiny again.

Historically, more than half of the budget Congress authorizes never becomes real spending — the difference vanishes into unpaid carryovers, outside the control of any new vote.

Concentration of earmarks: who controls the budget?

Three parliamentary committees and the Budget's general rapporteur, together, decide the fate of more than R$ 30 billion in earmarks. The Health Committee alone, with just 10 earmarks, moves R$ 9.6 billion — nearly R$ 1 billion per earmark on average. This volume of resources concentrated in very few hands exceeds the annual budget of several entire Brazilian states.

Three committees and one general rapporteur alone control R$ 30 billion in earmarks — more than the entire annual budget of several Brazilian states.

General Rapporteur's earmarks: health comes first

A single budget line — the temporary boost to Primary Care, decided by the Budget's general rapporteur — receives nearly R$ 4 billion, a value close to a full month of Bolsa Família nationwide. The other actions funded by the rapporteur, such as SUAS and integrated local development, get far smaller fractions of that amount, showing how much a single individual decision can direct colossal budget sums.

A single health action decided by the general rapporteur receives about R$ 4 billion — nearly the equivalent of a full month of Bolsa Família for the entire country.

Tax structure: who pays taxes?

Corporate income tax (IRPJ), levied on company profits, raises three to five times more revenue than personal income tax (IRPF), levied on individual income. In 2022, for example, IRPJ collected R$ 315.2 billion against R$ 57.9 billion for IRPF. At first glance this might look like tax progressivity, but the isolated figure hides the fact that a large part of the effective tax burden falls on consumption and payroll — taxes that weigh proportionally more on those who earn less.

The tax on corporate profit raises three to five times more than the tax on personal income — but that doesn't mean companies pay proportionally more than workers across the tax system as a whole.

Sectoral concentration of earmarks

More than half of all parliamentary earmark value — 51.8%, or R$ 79.2 billion — goes to the Health function. Social Assistance, an area that directly serves the most vulnerable population, receives just 2.6% of the total, about fifteen times less than Special Charges. The distribution by function reveals where Congress chooses to concentrate political bargaining power, and that choice doesn't always reflect the areas of greatest social need.

More than half of all parliamentary earmarks go to health; Social Assistance, which serves the most vulnerable, receives fifteen times less than Special Charges.

Half the corporate card value is spent without saying to whom

Brazil's transparency portal publishes every federal government payment card transaction since 2013: 1,666,696 operations totalling R$ 820.1 million. Publishing, however, is not the same as disclosing. In 18.9% of transactions the recipient field reads "Classified" — and because classified transactions are far larger than average, they account for 49.5% of all value spent. That is, half the money on the federal corporate card is published without revealing who received it. The opacity is not evenly spread: the Presidency (98.6% of value classified) and the Ministry of Justice and Public Security (86.0%) account for nearly all of it, while Education, Health, Planning and Agriculture report 0.0%.

The two largest corporate-card spenders account for half the value and hide the recipient in almost all of it — while ministries spending comparable sums publish 100% of their payees.

Three in four purchases skip bidding — but add up to 4% of the money

Counting public purchase processes and counting public purchase money produce opposite pictures, and using only the first leads to the wrong conclusion. Between 2020 and 2023, 60.5% of federal processes were bidding waivers and 14.6% were non-enforceability declarations — that is, three in four purchases were made without competition. The alarm dissolves in the value, however: waivers and non-enforceability together moved R$ 154.4 billion against R$ 3.69 trillion through competitive electronic bidding. Translated, 75.1% of processes correspond to 4.0% of the money. Waivers are the instrument of small recurring purchases; competitive electronic bidding is where 95.4% of spending passes. Anyone auditing risk should look at value, not count.

Waivers and non-enforceability dominate the process count and almost vanish in value — the big money passes through open competitive bidding.

Explanatory hypotheses

The low execution rate can be explained by the hypothesis of the budget as a political bargaining chip: officials commit resources to show action to voters, without any real commitment to short-term execution. The concentration of earmarks in a few committees and in the general rapporteur reveals a captured Legislature, in which a small number of actors control a disproportionate share of public resource allocation. And the tax structure, which taxes consumption and payroll heavily but leaves gaps in taxing wealth and large fortunes, reflects a State in which capital influences the rules to reduce its own effective burden.

Policy implications

Expanding proactive transparency, with open, granular data on budget execution, allows direct scrutiny by civil society and the press. Tying earmark value to actual execution — using unpaid carryovers as a control metric, not a discretionary reserve — tends to improve public-policy delivery. And advancing tax progressivity, with higher personal income tax rates for higher brackets and more effective taxation of wealth, could correct part of the distortion that today makes the tax system weigh more heavily on those who earn less.