Limit will apply to fuels, electricity, communications and public transport
The president Jair Bolsonaro (PL) sanctioned this Thursday (June 23, 2022) the bill that limits the ICMS (Tax on the Circulation of Goods and Services) on diesel, gasoline, electricity, communications and public transport. The sanction was published in extra edit of the DOU (Official Union Gazette).
The money saved will be used to try to increase the value of Auxílio Brasil. like the Power 360 showed, the government has given up on compensating states that have zeroed the ICMS tax rate on diesel and gas – one of the strategies initially evaluated by the government to contain prices. Now, Palácio do Planalto has decided to increase the installment of Auxílio Brasil, from R$400, to possibly R$600 per month until the end of 2022.
In the assessment of the government summit, the measure of increasing aid by R$200 will reach voters more quickly. ICMS compensation would depend on the governors and could be muffled by possible adjustments by Petrobras.
ICMS is a state tax that represented 86% of state revenue in 2021, or R$652 billion. The new law aims to contain the effects of inflation by reducing the prices of products considered essential for Brazilians. The changes, however, reduce the collection of the States with the tribute.
As items considered essential and indispensable, States cannot charge a rate higher than the general ICMS rate of around 17%.
Bolsonaro vetoed parts of the project that determined the financial compensation of states and municipalities so that the constitutional minimum amounts destined for Fundeb (Fund for the Maintenance and Development of Basic Education and for the Valorization of Education Professionals) and health were guaranteed at the same levels as before. of the new law to come into force.
In the justification, the president stated that “the legislative proposal goes against the public interest, given that it would create compensation for the Union of greater complexity and financial cost without real effectiveness”.
Also said that “a significant improvement was observed in the fiscal situation of states and municipalities, especially as a result of the growth in ICMS collection”.
Another vetoed passage was the compensation by the Union of indebted states that had lost revenue, by deducting the value of the installments of the entities’ debt contracts.
According to the government, in 2022 “almost the totality of the States and Municipalities will be able to have their accounts stabilized, without major difficulties”. Entities that are unable to rebalance their accounts may “demand renegotiations of the conditions of the Tax Recovery Regime”.
The president also vetoed the transfer of Union revenues from the CFEM (Financial Compensation for the Exploration of Mineral Resources). In justifying the veto, he stated that the measure would generate a fiscal impact in 2023 with the loss of revenue.
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