Author: Juliano Basile

Source: Valor Econômico - São Paulo / SP - 11/05/2010

Juliano Basile, from Brasília

The Judiciary is used by companies to pay less taxes than others, which causes an imbalance in the market and higher prices for consumers. This alert was given by lawyers and tax lawyers during a seminar at the Brazilian Institute of Ethics in Competition (Etco).

The entity, which has large companies in its membership, such as AmBev, Coca-Cola, Pepsi, Souza Cruz and Philip Morris, wants a new regulation to prevent actions that lead the Justice to grant tax benefits to few companies to the detriment of others of the same sector. This problem is recurrent in large markets, such as beverages, cigarettes and fuels, and distorts prices.

Etco's objective is to regulate article 146-A of the 1988 Constitution. This article was included, in 2003, by amendment, and provides that a complementary law may establish special taxation criteria, in order to prevent imbalances in competition. "The purpose of the article is to curb actions that use tax as a means to unbalance the market," said André Franco Montoro Filho, chief executive officer of Etco.

For lawyer Hamilton Dias de Souza, there are an excess of injunctions in some sectors and they disturb competition, as the Judiciary takes too long to analyze the cases. With this, some companies pay less taxes than others and this interferes with the formation of prices.

"ICMS tax breaks can lead to different prices," he said. He showed a table on the soap market in which, with ICMS at 0%, companies' profits reached up to 38%. On the other hand, when the ICMS reached 18%, the profit fell to zero. In the car market, this variation may exceed one thousand percentage points, he emphasized.

For lawyer Luís Eduardo Schoueri, there is a belief that the tax legislation only causes effects on tax collection. “We have to end this myth. Tax legislation affects the economy as a whole. ”

The lawyers cited at least three paradigmatic cases in which the problem was analyzed. The first was a consultation made by the National Thought of Business Bases (PNBE) to the Administrative Council for Economic Defense (Cade), at the end of the 90s. to attract industries. Cade established the understanding that the “fiscal war” harms competition.

The second case was the decision of the Federal Supreme Court (STF) involving the fuel market. In the early 2000s, companies in the sector filed for injunctions to obtain tax relief on the purchase of fuel from Petrobras. The case reached the STF which, at first, by decision of then President Marco Aurélio Mello maintained the injunction. The government appealed to the plenary of the Court, which, in an unprecedented decision, revoked the injunction.

The third case occurred in the cigarette market, in which paying or not paying taxes causes large price differences. In this case, the STF understood that there may be specific rules for cigarette manufacturers to comply with tax requirements.

Mariana Tavares de Araújo, Economic Law secretary at the Ministry of Justice, said that states that feel harmed due to tax conflicts should resort to the STF, not Cade. "But there is a role to spread the culture of competition," he added, referring to the agency. For the executive secretary of the Ministry of Justice, Rafael Favetti, the Judiciary plays a fundamental role in tax matters. "Today, there is no fiscal and tax policy without the Judiciary participating."