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Regulatory working group meets with Haddad; they want to offset losses in the basic food basket with taxation of bets
Deputies asked that the Ministry of Finance reconsider the possibility of having zero-rate beef through tax reform. The members of the 1st GT (working group) on the regulation of the PEC (Proposed Amendment to the Constitution) 45 of 2019 proposed taxing other products to reduce the impact of the basic food basket on the standard rate.
“We are analyzing precisely the technical issue. We listened to the requests, we brought them to the Ministry of Finance so that they could make a calculation to find out what the repercussions would be. […] how much will the reference rate increase […] To avoid an increase in the reference rate, we have to do some work”said federal deputy Hildo Rocha (MDB-MA) this Monday (1st July 2024).
The congressmen met with the Minister of Finance, Fernando Haddad, during the early afternoon to discuss details of the text with the ministry team.
In the project sent by the federal government to Congress in April, beef and other animal proteins were included in the list with a 60% reduction. Food-related sectors want these foods to be completely exempt.
Among the possibilities of increasing the charge to compensate for the exemption is the inclusion of electric cars and sports betting in the Selective Tax taxation list.
According to the deputy Reginaldo Lopes (PT-MG), the inclusion of bets in the so-called “sin tax” is a “great possibility”. Hildo Rocha also said that the chance is “very large”.
The Treasury estimates that the inclusion of these proteins in the exempt basic basket would increase the standard rate by 0.57 pp (percentage point). It would go from 26.5% to 27.1%. Lopes said the projection remains the same.
Read below who was present at the meeting:
- Fernando Haddad – finance Minister;
- Alexandre Padilha – chief minister of the Secretariat for Institutional Relations;
- Dario Durigan – executive secretary of the Treasury;
- Robinson Barreirinhas – special secretary of the Federal Revenue Service;
- Bernard Appy – extraordinary secretary for Tax Reform;
- Augusto Coutinho – federal deputy (Republicans – PE);
- Claudio Cajado – federal deputy (PP-BA);
- Hildo Rocha – federal deputy (MDB-MA);
- Moses Rodrigues – congressperson federal (Union-CE);
- Reginaldo Lopes – federal deputy (PT-MG);
- Joaquim Bird – congressperson federal (PL-PA);
- Luiz Gastão – congressperson federal (PSD-CE).
THE REGULATION
Haddad delivered the main text of the tax regulations personally to the presidents of the Chamber of Deputies on April 24, Arthur Lira (PP-AL), and the Senate, Rodrigo Pacheco (PSD-MG). The 2nd text was released in June.
In total, there will be 3 texts: 2 complementary bills (these are already with Congress) and 1 ordinary bill.
The complementary ones will deal with:
- the specifications common to the IBS (Tax on Goods and Services) and the CBS (Contribution on Goods and Services) – Contains definitions of all specific and differentiated regimes of federal, state and municipal taxes. It also discusses selective taxes;
- IBS specifications only – will define the format of the tax management committee. Addresses the transition from the current ICMS (Tax on the Circulation of Goods and Services) to the new rate.
The third text – in the form of an ordinary law – should detail how the transfer of resources to the Regional Development Fund will be made as compensation for tax benefits. This will also be done later.
UNDERSTAND TAX REFORM
In summary, the main change proposed by the consumption tax reform is the creation of VAT (Value Added Tax) to unify a series of rates. The objective is to simplify the billing system in Brazil.
The change is expected to come into effect by 2033. It was instituted through a PEC (Proposed Amendment to the Constitution), approved by the National Congress in December 2023.
Brazil has 5 taxes on consumption that will be unified by VAT:
- IPI (Taxes over industrialized products);
- PIS (Social integration program);
- Cofins (Contribution to Social Security Financing);
- ICMS (Tax on the Circulation of Goods and Services);
- ISS (Tax over services).
The dual VAT will consist of:
- CBS (Contribution on Goods and Services) – the merger of IPI, PIS and Cofins. It will be managed by the Union (federal government);
- IBS (Tax on Goods and Services) – unifies ICMS and ISS. It will have shared management between states and municipalities.
O Poder360 prepared a report that explains in detail the tax reform and the changes it will bring to citizens’ daily lives. Read here.
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