Government closes R$ 26.9 billion agreement with States to replace ICMS losses

This week, the Minister of Finance announced an agreement between the Union and governors so that the losses caused by the reduction of state taxes are deducted from federal debts

FáTIMA MEIRA/FUTURA PRESS/ESTADÃO CONTENTMinister of Finance, Fernando Haddad, participates in a meeting of the Political Council of the Coalition, held at the Planalto Palace, in Brasília

This week, the Minister of Finance, fernando haddad, announced that almost R$ 27 billion will be passed on to state governments due to the loss of revenue from the Tax on Circulation of Goods and Services (ICMS). The payments will be made through a reduction in the installments that the state governments must pay to the Union as a result of the debt. In an interview with Jornal Jovem Pan, Daniel Moreti, a lawyer specializing in tax law, spoke on the subject and considered that the problem stems from the reduction of ICMS on fuel, which occurred in 2022. According to Daniel, each State has its particularities regarding collection, but in São Paulo, there was no collection loss in relation to ICMS in the size that economists predicted. “São Paulo initially projected a loss of BRL 1 billion per month and obtained an injunction in the Supremo Tribunal Federal (STF) so that it could, already during the year 2022, reduce these debt losses with the federal government. The pattern we have in the State of São Paulo is that the government failed to pay its debt to the Union, in addition to the amount it would have had to receive back due to losses. That is, there were no losses in the size that was intended”, he pointed out. Then, the lawyer recalled that 12 Brazilian states that had losses in collection in 2022, increased the rates in 2023. “That is, in a little while several states will have new ICMS rates. In common operations, which are normally 18%, some states have increased it to as much as 21%, ”he said.

Asked about the possible fiscal gap, the specialist saw the agreement reached by Haddad as “very positive”. Regarding tax reform, Daniel also pointed out that there is a “mature” scenario for the approval of a tax reform “like never before”. “Although tax reform has always been talked about, it has never been discussed so much and so technically. Politically, the scenario has never been so well prepared, ”he said after pointing out the importance of the federal government in appointing Bernard Appy as extraordinary secretary for Tax Reform at the Ministry of Finance. “It is very possible that it will happen this year, but there is a factor that precedes any discussion of reform: the need to contain and reduce public spending”, he analyzed. According to the lawyer, it is not possible for there to be a revenue adjustment that is sufficient if expenses are not rearranged. “If approved, the reform will deal with compensation and tax collection adjustments, but we cannot lose sight of the fact that the fear that States have of losing their tax collection is the main factor that led to a tax reform not being approved”, he analyzed.

This week, the Minister of Finance announced an agreement with the governors of the country’s states to compensate for losses in ICMS collection. Last year, the Bolsonaro administration sanctioned a law that went on to classify items such as diesel, gasoline, electricity, communications and public transport as essential. Through the decision, a ceiling was set for the collection of state taxes on products and services. The purpose of the action was to lower fuel prices. Even without a defined value, the States began to ask the Union for R$ 45 billion – a value that later fell to R$ 37 billion and was closed at R$ 26.9 billion. “We reached a number that, in an agreement. When it’s a deal, it’s never satisfactory to anyone. Account that was made based on technical parameters. Technically, the work was intense,” Haddad told reporters after the announcement. So far, R$ 9 billion have already been compensated to the States since there were governments that managed to obtain an injunction to reduce losses with the payments of debts with the Union. São Paulo was one of the States.

Disclaimer: If you need to update/edit/remove this news or article then please contact our support team Learn more

Deborah Acker

I write epic fantasy; self-published via KDP. Devoted dog mom to my 10 yr old GSD, Shadow! DM not a priority; slow response at best #amwriting #author.

Leave a Reply