Supermarkets react to high IR and warn: will increase prices


By Mariana Barbosa, The State of S. Paulo - 19/01/2005
Collaborated: Amanda Brum, Milton F. da Rocha Filho

The increase in the contribution base of service providers introduced by Provisional Measure No. 232 may cause a price increase of 1% to 1,5% in 2005 in supermarkets, warned yesterday the president of the Brazilian Association of Supermarkets (Abras) , João Carlos de Oliveira. “The sector uses a lot of outsourced services, such as IT support, logistics, security and cleaning services,” explained Oliveira. “If they charge us more, we may have to pass it on to prices. And this is an account that the industry will do as well. ”
Sent by the government to Congress on December 30, the MP benefited employees by correcting the Income Tax (IR) table, but increased the contribution base of IR and Social Contribution on Net Income (CSLL) from 32% to 40% service providers. The MP also increased withholding tax on several categories of the service sector, such as agriculture and transport.

In order to pressure Congress not to approve MP 232, the São Paulo Commercial Association (ACSP) and medical entities launched the Brazilian Front yesterday against MP 232. According to ACSP president Guilherme Afif Domingos, the front will fight for all articles of the MP that do not concern the correction of the IR table to be transformed into a bill. "The government carried out a tax reform without discussing it with society," said Domingos.

ACSP estimates the number of service providers affected by the measure at 800 thousand. Representatives of all categories, such as engineers, architects and lawyers, among others, are being invited to participate in a meeting at the accounting companies union, Sescon, on the 27th. At the meeting, the details of a major demonstration that they intend to hold will be agreed. on February 15th at Clube Espéria, in São Paulo. The date coincides with the reopening of the work of the National Congress.

The front intends to keep the service sector together to prevent the government from negotiating and making concessions with different segments in exchange for support in Congress. "The government is beginning to slice the bargain in talks with the agricultural sector," said Domingos. "We want to fight and prevent this slicing."


The ACSP president compared the MP to a “tax tsunami”. "It came suddenly, when the lights went out in Congress, and now we are making an aftermath to assess the impact on each sector affected," said Domingos. For the president of the Federal Council of Medicine, Roberto D'Ávila, the increase in the contribution base of the CSLL and the IR of the service providers will be reflected in the service to the population. "It was already impractical to make quality medicine at the prices charged by health insurance companies," said D'Ávila. "With this increase in taxes then, there is no doubt that this will have an impact on the assisted population."

The Brazilian Medical Association estimates at 200 the number of doctors who declare tax under the presumed profit regime and would be harmed by the measure. "These doctors serve almost 40 million people insured in health plans," said the president of AMB, Eleuses Vieira de Paiva. "We have not had a readjustment in health plans for ten years and therefore there is no reason for the government to assume that there was an increase in profit in order to increase the contribution base."

The Federation of Agriculture of the State of São Paulo (Faesp), through its president, Fábio Meirelles, yesterday considered Article 6 of Provisional Measure 232 to be a true “confiscation of the income of rural producers”. In Fábio's analysis, with the measure, the government will only have an income tax collection of approximately R $ 400 million in São Paulo. "The MP becomes confiscatory because it confuses the concepts of taxable income and gross revenue of the property, by promoting the retention of IR on the billing and not on the taxpayer's net income."

From 2006, when all articles of MP 232 come into force, in the event that it is approved by Congress, the tax burden of service providers that declare on presumed profit will have increased by 63,84% since 2002. Survey made by Trevisan Consultores shows that a company with annual sales of R $ 1,2 million paid R $ 84.960 in taxes in 2002. As of 2006, the same company will pay R $ 139.200, a difference of R $ 54.240.

Opposition wants to overturn MP 232 still in recess
Businessmen and parliamentarians meet and prepare protests across the country

Renata Verissimo
Sergio Gobetti

BRASÍLIA - The artillery against Provisional Measure 232 thickened yesterday. In Congress, a strategy began to be articulated to vote - and overthrow - the MP even during the parliamentary recess. In São Paulo, a national front was launched against the measure. And, in the government, the Minister of Agriculture, Roberto Rodrigues, evaluated yesterday, in an interview, to the State that it is “perfectly possible” to reverse the MP provision that harms farmers. He revealed that he had not been consulted on the matter.
Yesterday, in the Chamber of Deputies, opposition businessmen and parliamentarians met to plan protests in the states and in the capital until March. In addition, they intend to reject the MP during the parliamentary recess. For that, it will be necessary to convene the Congressional representative commission. Comprised of 17 deputies and 8 senators, elected every year before the recess, the commission has as one of its functions to deliberate on the possible “suspension of normative acts from the Executive Power that go beyond the regulatory power”. This offensive is added to the two direct actions of unconstitutionality brought by the PDT and the PFL in the Supreme Federal Court.

“If this government wants to talk to society, it has to be democratic. We discussed tax reform for seven years and nothing happened. And now the government, in a provisional measure, is making a tax reform ”, said the president of the National Confederation of Services, Luigi Nese, during the meeting.

“The government gives with one hand and takes with two,” said the deputy leader of the PDT in the Chamber, Deputy Pompeo de Mattos (RS), noting that the calculation base for Social Contribution on Net Income (CSLL) had already been elevated from 12% to 32% in the second half of 2003.

The MP, dubbed the “box of evil” and “Transgenic MP”, will also reach thousands of rural producers, who will be required to collect 1,5% Income Tax on all sales at source. Currently, they only pay tax on the annual return, based on profit.

This change was discussed so quietly in the economic team that it even took Agriculture Minister Roberto Rodrigues by surprise. "I would like to have been consulted, but I am sure that it is perfectly possible to review criteria," he said. "I hope that in the next 2 or 3 days I will have a position."

Entrepreneurs argue that the MP is overburdening the service sector and, indirectly, the taxpayer, who in some cases will have to pay higher prices.