Representatives of the States and the Union differed this Tuesday (2.Aug.2022) on the measures to compensate for the loss in ICMS (Tax on the Circulation of Goods and Services) collection, with the changes in the collection of the tax. There were also disagreements on points about financial conditions and the impacts of changes in public coffers.
The differences were raised at the 1st meeting of a special commission created by order of Minister Gilmar Mendes, of the STF (Supreme Federal Court). The meeting was held by videoconference, and ended without an agreement. A next meeting was scheduled for August 16, at 2 pm, in person at the Supreme Court.
The group has representatives from the States, the federal government, Congress, municipalities and the Public Ministry. The deadline for completing the work was set for November 4th.
The commission had 5 people representing the States and 5 the Union – including the Executive and Legislative – with the right to vote. At the 1st meeting, the number was increased to 6, on an equal basis.
Representatives of other bodies, such as the Senate, FNP (Frente Nacional de Mayores) and PGR (Procuradoria Geral da República) participate as observers. Assistant judge Diego Veras is responsible for mediating the proceedings.
The group’s objective is to present proposals on the collection of ICMS levied on fuels. States and Union have clashes in at least 4 actions in the STF on the subject, under the rapporteurships of Gilmar Mendes, Rosa Weber and André Mendonça.
Congress approved the limitation of the ICMS tax rate on fuel, electricity, transport and telecommunications. The rule established that the federal government will have to financially compensate entities that lose more than 5% of the tax collection in 2021.
The attempt at a solution via conciliation was taken in the action in which the president Jair Bolsonaro (PL) called for the limitation of ICMS on fuels in 26 states and the Federal District. The order also applies to the action in which 11 states and the Federal District question the single ICMS rate on products.
Meeting
the president of comsefaz (National Committee of Secretaries of Finance, Finance, Revenue or Taxation in the States and the Federal District), Décio Padilha, said that the collection of the tax, as it stands, represents the enactment of the “bankruptcy of the federative pact”.
He said that the loss of annual collection with ICMS is R$ 92 billion.
States criticize compensation in the event of loss of revenue, as they understand that the defined criterion would hardly be activated. The established parameter is if there is an impact on total collection greater than 5% compared to last year. The understanding is that this trigger would not be triggered because of high inflation and for not specifically considering products that had limited rates.
“The trigger puts loss of revenue from all products and goods and services. It has to be [sobre] the loss of what was reduced in fuels”he said. “This trigger had to be on top of what was reduced in the rate”.
The special assistant secretary of the Treasury and Budget of the Ministry of Economy, Julio Alexandre Menezes da Silva, said that preliminary data until June show an increase in ICMS collection of R$ 48 billion.
“We are living in a moment when States and the Union are increasing tax collection. Either we will increase the tax burden, or we will take this increase in revenue and take some measures”, declared.
“It is important for us to discuss taking into account the data, the information has to be clear, transparent, on the fiscal situation of the States, how the collection and expenditure is going, and not to throw such a heavy weight on the Union at this very specific moment that we are living.”
The Undersecretary for Intergovernmental Financial Relations, of the National Treasury Secretariat, Pricilla Maria Santana, stated that there has been an improvement in the financial results of the Union and the States in the last 7 years.
“The collection projection that will face essential services, in the collective of resources is not lacking in relation to what you yourselves [Estados] predicted last year.” declared.
She defended changes in ICMS collection. Regarding compensation for loss of revenue, she said she was in favor of criteria that take into account the total collected, and not an analysis of each product affected by the legislative changes.
Santana also said that the areas of health and education receive resources from the FPE (State Participation Fund), in addition to the ICMS. According to her, the background “is performing very well” with growth of 22% more than in the previous period.
São Paulo’s Finance Secretary, Felipe Salto, said that the problem with fuel prices is not ICMS.
“A top-down decision to reduce the rate and calculation base came. The central problem was never the ICMS, it is the movement of the price of commodities. The price of oil is what brought us to the situation of pass-through in fuel prices, combined with the devaluation of the real against the dollar”.
The secretary defended the creation of a stabilization fund for fuel prices, fed with resources from dividends distributed by Petrobras.
Understand
In June, Minister Gilmar Mendes called a conciliation hearing between the states and the federal government to end the impasse over the tax. On that occasion, the States presented the following proposal:
- ICMS calculation base on diesel calculated using the average of the last 60 months;
- non-binding of the general ICMS rate with the principle of essential fuel;
- application from 2024 of rates on fuel supply operations higher than rates on operations in general;
- removal of the Tust (Tariff for the Use of the Electric Energy Transmission System) and the Tusd (Tariff for the Use of the Electric Energy Distribution System) from the ICMS calculation basis, until the conclusion of the judgment on the matter, in the STJ (Superior Court of Justice).
The AGU (Advocacia Geral da União) rejected the agreement stating that there is “unfeasibility of acceptance of the proposal in the manner in which [é] presented by the States and Federal District”.
The AGU presented the following counter-proposal:
- monitoring the impacts of laws that unified and limited the ICMS rates on fuels, “in order to provide greater legal certainty and uniformity in the application of normative acts“;
- presentation of an opinion by the Attorney General’s Office of the National Treasury on the application of said laws “in order to provide greater legal certainty and uniformity in the application of normative acts”.
According to the AGU, if it is found that the excess collection in recent years “appears to be consistent”there will be no modulation or compensation between the parties.
If detected “relevant insufficiency of collection and possible weakening of public finances”a report will be sent to the Legislature “for deliberation on the subject”, ruling out the possibility of “additional compensation by the Union”.
The concern of the States is with a possible fall in the collection for the implementation of the norms.
In July, STF ministers Alexandre de Moraes and Luiz Fux gave decisions that benefit states for loss of revenue. Moraes suspended on Sunday (July 31) the payment of installments due on Piauí’s debt with the Union and authorized São Paulo to compensate for the drop in collection with ICMS that is levied on fuel, electricity and communications.
The magistrate also gave a similar order for the benefit of Maranhão and Fux on the debt of Alagoas.
At the conciliation meeting at the end of June, representatives of the States criticized the measures approved by Congress that established a single tax rate on fuels and the limitation of the collection of the tax on fuels, energy, communications and collective transport.
The Comsefaz (National Committee of Secretaries of Finance) said at the meeting that the loss of revenue with the two laws amounts to around R$ 134 billion. He also stated that they would affect transfers to education and health.
Governors of 11 states and the Federal District called the STF to question the law that limited the collection of ICMS on fuel, energy, communications and public transport.
There is also a lawsuit in which 11 states question the law that unified the ICMS tax rates on fuel.
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