In a setback for President Luiz Inácio Lula da Silva’s administration, Brazil’s lower house of Congress voted on Wednesday to remove a proposed investment tax overhaul from its agenda — effectively halting a key fiscal reform aimed at increasing public revenue. Lawmakers voted 251 to 193 against debating the measure, which was set to expire if not passed that day.The proposal sought to standardize income tax rates on financial investments and raise taxes on interest from equity payments, potentially generating 20.9 billion reais ($3.9 billion) in revenue next year to support Brazil’s fiscal goals. A revised version, backed by the government, had reduced that projection to 17 billion reais. President Lula called the decision “a defeat for the Brazilian people,” emphasizing that the reform was vital to ensuring a balanced budget. Finance Minister Fernando Haddad said the government would continue pursuing its 0.25% primary surplus target for 2026 despite the setback. Analysts say the rejection underscores political divisions in Congress and poses challenges for Lula’s efforts to strengthen Brazil’s fiscal framework while maintaining social spending and investment programs.