04/07/2024 – 20:33
The working group formed in the Chamber of Deputies to analyze the regulation of tax reform presented its first report this Thursday, the 4th. The text included physical and digital gambling (such as sports betting), and electric vehicles in the list of products subject to the Selective Tax – the so-called “sin tax”, which will tax items considered harmful to health and the environment at an extra rate. The deputies also decided to leave meat out of the basic basket with zero tax, despite pressure from President Luiz Inácio Lula da Silva for the exemption of more popular animal proteins, such as chicken.
This first report deals with the implementation of the Federal Contribution on Goods and Services (CBS) and the Tax on Goods and Services (IBS) for states and municipalities, replacing five taxes currently levied on the consumption of goods and services (PIS, Cofins, IPI, ICMS and ISS). The goal of the Speaker of the Chamber of Deputies, Arthur Lira (PP-AL), is to conclude the vote before the start of the parliamentary recess, which begins on the 18th. The government sent the Chamber of Deputies a request for constitutional urgency, so that the bill can be considered directly in the plenary, without going through new instances.
“Gambling is harmful to health and should be included on the list of products to be taxed, just as we include electric cars. It is a car that, from the cradle to the grave (from production to recycling), pollutes, especially in the grave, unlike combustion cars,” said deputy Hildo Rocha (MDB-MA), one of the members of the working group.
As revealed by the Statethe inclusion of electric vehicles in the Selective was a recommendation made by the Ministry of Development, Industry, Commerce and Services, claiming not to distinguish between combustion, hybrid and electric vehicles and citing the manufacture and disposal of the battery as polluting factors.
According to the deputies, the trucks were spared from the Selective Tax. Deputy Reginaldo Lopes (PT-MG) stated that cargo transportation in the country is basically by road and that, therefore, it should escape the surcharge.
In addition to electric vehicles and gambling, the list presented yesterday by the deputies mentions aircraft and vessels; cigarettes; alcoholic beverages; sugary drinks; and mineral goods (such as oil and iron ore). Ultra-processed foods remained outside the Selective Tax, as did weapons – a topic that should return to the plenary session for discussion. Vice President Geraldo Alckmin called the understanding regarding weapons a “mistake.” “Food must be exempted from tax,” he stated.
Proposal leaves meat off the list of tax-exempt basic food basket items
Despite pressure from President Luiz Inácio Lula da Silva to exempt animal proteins consumed by the poorest, meat was left off the list of basic food products with zero tax in the proposal to regulate the tax reform presented yesterday by the working group of the Chamber of Deputies. “There are still points of divergence in the text. These points will be discussed in the benches”, stated deputy Luiz Gastão (PSD-CE), who is part of the group, when presenting the text.
“Any different situation for any sector will impact the reference rate (of VAT), of 26.5%. But we believe that we can reduce this rate through the improvements we made to the text,” he added.
President Lula’s statements in favor of exempting popular meats, such as chicken, have increased pressure from the food sector on lawmakers to expand the number of items in the basket. On Wednesday, at the launch of the Safra Plan, Lula even said that he would be “happy if I could buy meat without tax.”
The inclusion of meat in the basket, however, would increase the reference rate of the new VAT. According to the calculations of the economic team and the World Bank, the inclusion of meat in the basic basket would have an impact of 0.57 percentage points on the standard rate – which would go to 27.1%, as shown in the State.
The proposal submitted by the economic team to Congress did not include any type of meat in the basic food basket with zero tax. According to the Finance Ministry’s project, animal proteins were included in the reduced rate, with a 60% VAT discount. Items considered luxury items, such as salmon, roe and foie gras, will pay the full rate, which the Finance Ministry projects at 26.5%.
The Brazilian Supermarket Association (Abras) has been working to include meat in the basic food basket. Yesterday, the organization issued a statement saying it was “optimistic about the possibility of changing the report by next week, when it should be voted on by the deputies.”
“Access to meat for the poorest population was the subject of President Luiz Inácio Lula da Silva’s campaign, who expressed yesterday (Wednesday) his desire to include proteins in the basic food basket. Members of the working group have also declared their support for the proposal,” the note says.
On Wednesday, the Speaker of the Chamber of Deputies, Arthur Lira (PP-AL), stated that exempting meat could make the price “heavy,” referring to the increase in the standard VAT rate. Lira argued that increasing “cashback” (a mechanism for returning part of the taxes) for low-income people would be more effective than exempting animal proteins.
Medicines
The report also introduced changes to the tax rate for medicines, the list of exemptions and the frequency of reviews.
Among the changes is the increase in the tax rate for medications containing the active ingredient sildenafil citrate (such as Viagra), used to treat erectile dysfunction and pulmonary hypertension, from zero to the reduced tax rate, with a 60% discount. “We have reduced the tax rate for menstrual dignity to zero and increased the tax rate for Viagra,” said Congressman Reginaldo Lopes (PT-MG), referring to the inclusion of menstrual pads in the list of items exempt from VAT. (CONTRIBUTED BY VICTOR OHANA, IANDER PORCELLA and LUIZ ARAÚJO)
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