“Fiscal war between states hinders ICMS reform”, says Levy

By ETCO
09/01/2015
Joaquim Levy, new Minister of Finance
Joaquim Levy, new Minister of Finance

A fierce federative dispute could mark the Senate's examination of the reform of the Tax on Circulation of Goods and Services (ICMS), announced as one of the government's priorities by the new Minister of Finance, Joaquim Levy, at the ceremony for the transfer of office, at Monday (5).

Initially proposed by President Dilma Rousseff, in the Senate Draft Resolution (PRS) 1/2013, the gradual unification of interstate rates has been discussed for two years by senators, with four public hearings and several meetings of the Committee on Affairs Economic (CAE).

Although the commission approved a substitute, in May 2013, several points of the proposal, such as the exceptions to unification and the compensation of losses with the change, divided the parliamentarians. The matter is now being processed by the Regional Development and Tourism Commission (CDR).

The formula then found - increasing the number of rates and not unification - displeased the government, which dropped the Provisional Measure (MP) 599/2012, one of the points on which the reform was based. It established two funds: one to compensate for the loss of revenue resulting from unification and the other to fill the post-fiscal war scenario, a regional development policy.

The other point of the tripod was the validation of tax incentives granted unilaterally by the states involved in the fiscal war. Without the vote to unify the rates, the validation did not succeed in the proposal initially sent by the Executive, which passed through the Chamber of Deputies as the Complementary Law Project (PLP) 238/2013 and, in the Senate, as PLC 99/2013. It remained in the project, which became Complementary Law 148/2014, only the part that deals with the refinancing of the debts of the states.

Convalidation becomes necessary in the face of repeated decisions by the Supreme Federal Court considering the tax incentives granted by the states without the unanimity of the National Council for Farm Policy (Confaz) to be unconstitutional. The requirement is provided for in Complementary Law 24/1975, which regulates the agreements for exemption or reduction of ICMS rates.

In the speech of job transfer, Joaquim Levy defended a reform that discourages the fiscal war. According to him, a change that at the same time reduces the tax rates at source and eliminates the legal risks of the incentives already granted will favor the resumption of incentives in the states.

Source: Congresso em Foco (06/01)

 

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