San Francisco Frontiers - In Brazil, disinformation deals Lula a bruising defeat

The political fiasco centered around the beloved instant money transfer system known as PIX, used tens of millions of times a day by Brazilians for everything from paying bills to giving money to beggars on the street.

It all started when new government rules kicked in on January 1 including PIX in the institutions whose financial transactions would be tracked in a bid to combat tax evasion.

This is nothing unusual for traditional banks, but a communication crisis quickly ensued that engulfed government, forcing it to revoke the rule entirely.

A flood of disinformation reported that PIX transactions would be taxed, and the opposition -- including former right-wing president Jair Bolsonaro -- exploited the confusion by pitching the measure as an attack on the poor.

Nikolas Ferreira, 28, a fiery social media star-turned-lawmaker for the right-wing Liberal Party, released a video slamming the measure that racked up more than 300 million views.

He admits that "PIX will not be taxed" but "I don't doubt that it could be."

"The Lula government will monitor your spending," he said, referring to President Luiz Inacio Lula da Silva. "The people who will be most affected by this measure will be the workers, who will be monitored as if they were major tax evaders."

- 'Humanity's greatest evil' -

The fake news crisis unfolded as Brazil's government is locked in conflict with social media giant Meta over its weakening of controls on disinformation on its platforms like Instagram and Facebook.

Last year, the Supreme Court blocked Elon Musk's X platform for 40 days for failing to comply with a series of court orders against online disinformation.

A survey by the Quaest polling institute published Friday showed that 87 percent of those surveyed had heard that government would tax PIX transactions, and 67 percent of them believed it.

The government tried to fight back, with denials from tax authorities and Finance Minister Fernando Haddad, and a video of Lula making a PIX payment to his favorite football team.

But the damage was done. The government not only reversed the measure on Thursday, but issued a provisional measure prohibiting the taxation of PIX.

"If it was fake, why did they revoke it," Ferreira wrote on X, as opposition members praised his role in forcing the government to backtrack.

Disinformation "is humanity's greatest evil" and "can cause profound damage", said new Communication Minister Sidonio Palmeira as he took office Tuesday.

The appointment of Lula's campaign strategist from his 2022 election victory was seen as a bid to boost the government's communication of its political victories after a series of setbacks -- with a focus on fighting fake news.

Highlighting the communication battle, local media reported that a marketing expert in charge of Bolsonaro's failed presidential campaign in 2022 helped strategize the response to the PIX debacle, choosing Ferreira to lead the attack.

- 'Yet another tax' -

Andre Eler, technical director of Bites consultancy, said the government had recognized that "it would not be possible to reverse the extent of the damage caused by this shoddy communication."

"The government in general is poorly informed about what happens on social media. And it took too long to respond," he said.

This allowed the opposition to exploit public fears "that this is a tax-loving government," said Eler.

Lula's government has been battling ballooning public debt, and concerns about spending have pushed the real currency to record lows against the dollar.

"Since taking office, the Lula government has sustained part of the increase in public spending with a rare desire to collect taxes," read a column in Friday's O Globo newspaper.

"In a country with one of the highest tax burdens in the world, fake news about yet another tax quickly gains credibility."

Breno Lima Moreira, a researcher linked to the Central Bank, said that while false content in Brazil was initially very focused on politics, economic issues have seen "the greatest growth" in recent years.

H.King--SFF