Lula Criticizes End of Union Tax, Cites Economic 'Asphyxiation' of Unions

The Bottom Line

• President Lula criticized the abolition of the mandatory union tax, arguing it was designed to economically "asphyxiate" labor unions.
• He drew a parallel between defunding unions and the strategy to dismantle organized crime, emphasizing the financial basis of power.
• Lula highlighted that businesses, unlike unions, retain robust funding mechanisms such as Sistema S, ensuring their organizational and advocacy capabilities.

Lula Slams Union Tax Abolition, Cites Economic Asphyxiation

President Luiz Inácio Lula da Silva (PT) on April 15, 2026, strongly criticized the termination of the mandatory union tax, a measure abolished during the 2017 labor reform. Speaking in Brasília, Lula framed the policy as an attempt to "asphyxiate the economy" of labor unions, drawing a direct parallel to the government's strategy against organized crime. This rhetoric underscores a persistent ideological divide regarding labor funding and the role of unions in Brazil's economic and political landscape.

The "Asphyxiation" Analogy

Lula asserted that those who supported the end of the union tax intended to cripple the financial capacity of labor organizations. "Many people believe the union movement died, and that's why they ended the union tax. They did to you what we want to do to organized crime. If we want to end organized crime, we must asphyxiate their economy. As long as they have the money they have, we won't succeed," Lula stated. This comparison highlights the President's view that financial independence is crucial for unions to exert influence and protect workers' rights. The mandatory union tax, which was collected annually from all workers (unionized or not), provided a significant and stable revenue stream for unions before its abolition. Its removal forced unions to rely on voluntary contributions and membership fees, leading to a substantial reduction in their financial resources and, consequently, their operational capacity.

Disparity in Funding: Unions vs. Businesses

The President further argued that while unions were financially weakened, businesses maintained robust funding mechanisms. He specifically cited the "Sistema S" (S System), a group of social service organizations funded by mandatory contributions from companies based on their payroll. "They treated unions this way: let's asphyxiate them, leave them without money, so they can't organize, make pamphlets, protest, and we will asphyxiate them. But businesses were not asphyxiated because they have Sistema S. They continue doing what they always did," Lula remarked. This distinction underscores a perceived imbalance in the support structures for labor versus capital, with Lula suggesting that the government's policies have historically favored employers. Sistema S entities, such as SENAI (National Service for Industrial Learning) and SESI (Social Service of Industry), provide vocational training, healthcare, and leisure services, benefiting industries and their employees. Their continued funding, contrasted with the defunding of unions, is a point of contention for the current administration.

Call for Renewed Union Activism

Lula also acknowledged that some unionists had contributed to the demise of the mandatory tax. He urged labor centrals to intensify their lobbying efforts in the National Congress, pressuring deputies and senators to restore workers' rights and potentially re-evaluate union funding models. This call to action signals the administration's desire to revitalize the union movement and empower it to advocate more forcefully for its agenda. The President's remarks suggest a strategy to mobilize grassroots support and legislative pressure to reverse aspects of the previous labor reform that were seen as detrimental to workers' organizations.

Political Landscape and Future Engagement

Addressing the upcoming elections, Lula criticized a historical pattern where unions would "curse the boss all year, but vote for the boss during the election." He pledged his unwavering support for unions, regardless of the outcome of the presidential election in October. "Dear comrades, this is just the beginning. The struggle does not end with this; it only begins. Whatever happens [in the elections], you cannot abdicate your sacred responsibility to fight, fight, and fight for the workers you represent. This is your destiny," he affirmed. This statement reinforces Lula's long-standing alliance with labor movements and positions him as a steadfast advocate for their causes, aiming to galvanize their political participation and ensure their continued relevance.

Union Demands for 2026-2030

During a meeting at the Planalto Palace on the same day, Lula received a document from labor centrals outlining 68 specific demands for the period spanning 2026 to 2030. These demands likely encompass a range of issues, including wage increases, improved working conditions, stronger collective bargaining rights, and potentially a new framework for union financing. The presentation of such a comprehensive list signifies the unions' proactive stance in shaping future labor policy and their expectation of continued dialogue and support from the Lula administration. The long-term scope of these demands indicates a strategic vision for labor rights beyond the immediate political cycle.