Source: Valor Econômico - SP, 02/07/2009

The adoption of tax substitution by some States does not seem to prevent the transfer of the reduction in the Tax on Industrialized Products (IPI) for construction material and white goods to consumer prices, points out the analysis of the evolution of inflation of these goods in the main metropolitan regions of the country. parents. In April and May, prices for cement, paints, tiles and floors, for example, fell more in the metropolitan region of São Paulo than in the national average. São Paulo is the state that most uses the measure that makes the industry anticipate the payment of the tax to be paid in the later stages of commercialization, to combat tax evasion.

In April and May, cement prices fell 4,63% in São Paulo, a slightly stronger drop than the 4,49% decrease registered in the average of all regions surveyed by IBGE, according to figures from the Broad Consumer Prices (IPCA).

In Recife, which is in a state that also adopts tax substitution for the cement industry, the product fell 6,07% in these two months. Salvador, located in a state that did not implement the mechanism, saw cement prices drop 5,17% in the period. The drop was even smaller in Curitiba, reaching 3,31% in April and May. Paraná also does not adopt the substitution for these products.

The Minister of Finance, Guido Mantega, has argued that the tax benefit of the reduction in the IPI on white goods and construction material as of April 17 did not fully reach the consumer because of the tax substitution adopted by some states. The figures above, however, suggest that the evolution of prices for these products does not depend on whether the mechanism is adopted or not.

For the analyst Francis Kinder, from Rosenberg & Associados, other factors help to explain why the reduction in many cases of the IPI did not fully reach the consumer. He notes that, in April, when the tax exemption for white goods and construction material began, there was already some improvement in credit for individuals, which made it less necessary to lower prices to resume sales.

Kinder also says that there is a “greater dispersion of the retail market” that sells appliances and construction materials, which may have more intermediaries than in the case of the vehicle sector. For him, it is also possible that the reduction was not the strongest because, in some cases, prices were already falling in previous months, even before the IPI reduction, due to weak demand. In the national IPCA, for example, the prices of washing machines had dropped 1% in the accumulated value of February and March.

For white goods, the government of São Paulo adopted the mechanism as of June 1. In the IPCA-15 of last month, which shows the evolution of prices between mid-May and mid-June, the prices of washing machines fell 1,92% in the metropolitan region of São Paulo, while there was an increase of 0,29, XNUMX% in Curitiba, Paraná, a state where there is no tax substitution for these products.

In April and May accumulated in the IPCA, the prices of washing machines had decreased 6,41% in São Paulo and 3,88% in Curitiba. In some metropolitan regions, there were very sharp falls, especially in the case of refrigerators. In Recife, for example, the prices of these products fell 8,33% in April and May. In Salvador, on the other hand, the fall was even greater, at 12,05%. Neither Pernambuco nor Bahia adopt the tax substitution for the white line.

Economist Fábio Romão, from LCA Consultores, raises another point that may explain less significant falls than might be expected with the reduction of the IPI, which, in the case of the refrigerator, for example, dropped ten percentage points, from 15% to 5% . For him, it is possible that there were still products in stock formed with the “old” IPI when the tax was reduced. As inventories are spawned and new products are purchased by merchants with the lowest IPI, consumer prices are reduced.