Author: Bianca Ribeiro

Source: Valor Econômico - SP, 03/07/2009

SÃO PAULO - From the discussion between the tax benefit of reducing the IPI for the white line and the possible opposite effect generated by the tax substitution for manufacturers in São Paulo and Minas Gerais, the only consensus is that anticipating the payment of ICMS in the productive sector is a great mechanism to combat tax evasion. In addition, taxpayers and the federal government believe that the measure may have been triggered at the wrong time and turned into a disincentive to reduce prices.

Although the transfer of the tax benefit to final prices has so far not shown systematic differences between states that practice tax substitution or not, as shown by Valor's yesterday report, it is a fact that prices for white goods have not fallen at the same pace falling rates. According to industry and retail entrepreneurs, in addition to the effect on working capital, the substitution system inhibits the granting of discounts.

On the one hand, the federal government, through the Minister of Finance, Guido Mantega, has stated that the collection of the entire ICMS in the production chain, as occurs in São Paulo and Minas Gerais, burdens production and compromises the reduction of IPI for the white line. On the other hand, the São Paulo government defends itself by stating that the tax substitution is an instrument to avoid tax evasion and does not eliminate or reduce the effect of the lower IPI.

The shooting already raises suspicions of political bias, since the provocation came from the federal government and directly affects the governors who have adopted the white line tax anticipation mechanism so far: José Serra and Aécio Neves, both listed for the presidential dispute in 2010 .

In the view of the federal government, consumers in São Paulo could pay even less for stoves, refrigerators and washing machines were it not for the effect of tax substitution.

With this measure, the payment of ICMS for the entire chain is made by the manufacturer after the sale to the trade, which presupposes an advance payment of the tax, even if there is a deadline for collection. Until then, the tax was collected throughout the chain until the sale was effectively completed at the consumer's end.

The tax substitution method, which is very efficient to avoid tax evasion in other commercial links, ends up incorporating some risks and costs, according to specialists, industrialists and retailers.

The Secretariat of Finance of the State of São Paulo says that there was no “anticipation” of the payment of taxes, and that the tax substitution, on the contrary, incorporates a period of two months for the payment of the ICMS, after the taxable event. According to George Tormin, deputy secretary of the agency, this period can reach 90 days if the taxable event occurs at the beginning of the month.

Antonio Mendes, financial vice president of Mabe - one of the largest banking line manufacturers in the country - says that if the retailer takes more than 60 days to pass the ICMS on the sale to the industry to the industry, the manufacturer's cash may be uncovered , as the payment is made within this period. Mendes comments, however, that, at Mabe, contracts with distributors are 50 days on average.

Lawyer Júlio de Oliveira, from the Machado e Associados office, states that, in addition to the risk of a delay in the transfer of retail, or even a default, the biggest problem related to tax substitution concerns the calculation base established in the value margin. (MVA), which ends up generating an increase in the tax to be collected.

"The margins do not reflect the real value of the goods, which are overvalued", says the lawyer regarding white goods in the state of São Paulo. When establishing the payment of ICMS on a price list above the real sale price in the market, Oliveira says that the government is experiencing an “artificial increase in revenue”.

Thus, although there was no increase in the ICMS tax rate, manufacturers are paying more tax and, therefore, incorporating a higher tax in the sale value.

Oliveira says that many injunctions are already appearing against the measure, which came into force in early June for the white line in São Paulo, but the revision of the established prices depends on proof by industrialists and retailers, through ordering of studies, such as those of FGV, so that a review of the bases is opened.

Thus, Oliveira believes that, even if the industry passes all the IPI discount to retailers, the tax exemption may not reach the consumer completely. This is because the product note already has ICMS on a fixed price, but it can vary when it comes to the shelf.

In times of crisis, mainly, competition promotions are typical, which can result in a sale value lower than that predicted for the ICMS levy to be collected for the industry and, of course, lower profit margins. Thus, those who reduce the price end up paying a relatively higher ICMS.

There may even be distortions for the same retail chain. The ICMS paid for the refrigerator sold in a high-class mall is the same as that paid for that sold in a low-income neighborhood unit, but the sale prices vary significantly in both situations. Valdemir Gomes Dantas, president of Latina, which manufactures tanquinhos in São Paulo, notes that this difference between the highest and lowest price reached 25% in May, when the normal is usually 10% to 12%.

The lawyer Waine Domingos Peron, from Braga & Marafon Advogados, notes that the retailer who paid the tax included in the full price of the refrigerator or stove and sold for less, cannot have the tax refund related to this price difference. Peron says that this impossibility is unconstitutional and that many of his clients have already filed a lawsuit asking for a review of this measure.

Dantas, from Latina, says that his costs increased from 1,5% to 2% with the tax substitution only due to the bureaucracy and cash exercises to provide for the tax collection, but says that the full effect can only be assessed in the the next few months, when the payment is actually made.

The executive comments that his company passed on all the discount given by the Union to the IPI of the white line, but recalls that this exemption on the final product does not cover the production chain. That is, the six pack manufacturer continues to pay the same IPI on inputs, such as engines, plastics, etc. According to Dantas, more than 10% of his clients were unable to make the full transfer to the final product.

Domingos Alves, general supervisor of Lojas Cem, agrees with the criticisms of Minister Guido Mantega and considers that the tax substitution may in fact be hampering the more attractive sales conditions generated by the reduction of the IPI.

Everyone agrees that the measure that anticipates the tax in the industry is an excellent mechanism to reduce tax evasion, but the moment may not be the most appropriate, given the need to heat up the economy in the midst of the crisis. "In the medium and long term, the proposal is good, but the timing (of the tax substitution) could be better", evaluates Patrício Mendizábal, president of Mabe in Latin America.

At the same time, state governments are trying to maintain the level of revenue even in the midst of the crisis, especially in a period that precedes elections for governors, next year. Mantega warned last Friday that he would meet with Serra this week to discuss the matter, but the meeting did not take place.

(Bianca Ribeiro | Valor Online)