Source: Valor Econômico, 03/04/2009

The government is studying a new model for the taxation of cigarettes, based on the finding that the current one is exhausted. In the current system, any rate increase encourages smuggling. Government technicians discuss a new tax structure inspired by the system adopted for cold drinks, which considers quantity and price as the basis for the Tax on Industrialized Products (IPI), and not just quantity, as the current norm.

Current standards are considered inefficient. There are six bands that have just received, by decree, a linear increase of 23,5% in the specific rate. Before the increase, the smallest was R $ 0,764 per pack of 20 units and the highest was R $ 1,397.

Government and industry know that this system is exhausted because yet another load increase means pushing a large part of consumers underground. When taxation is high, the tax evasion premium becomes worth the risk. The objective of the new system that is being developed is to merge quantity and retail price on the basis of the IPI, which is the highest tax burden on cigarettes.

Today, the inspection of the Federal Revenue will close the Brazilian Tobacco Industry (Itaba), in Jandira (SP), which was able to operate through injunctions that suspended the cancellation of the manufacturer's registration with the tax authority. The evolution of the tax system may also end or reduce the weight of the clandestine market. According to a government interlocutor, small manufacturers have a share of approximately 13% in the Brazilian market, equivalent to that of Philip Morris. The leader is Souza Cruz, with more than 70%.

According to the IRS, the increase announced for IPI should add R $ 560 million to the collection this year and another R $ 750 million in 2010. In the case of PIS and Cofins contributions, the government sent a provisional measure (MP) to Congress to raise in 70% the calculation base (retail price) charged at the factory or at the importer through tax substitution. In practice, the weight of PIS and Cofins on the packet price rises from 6% to 9,8%, on average, according to the Revenue calculations. With the increase in the burden of these contributions, an additional R $ 415 million will come in 2009 and R $ 790 million in 2010.

The problem is that the tax exemptions promoted to stimulate strategic sectors, mainly vehicles and construction, will take more money from the Revenue than will bring this increase in the burden of cigarette taxes.

According to the IRS, IPI Fumo collected R $ 548 million in the first two months, which means a drop of 1,81% over the same period in 2008. In 2008, IPI Fumo collected R $ 3,21, 8,54 billion, which represented a real growth of 2007% over the XNUMX result.