The Senate Plenary decided to postpone the vote on PLS130 / 2014, by Senator Lúcia Vânia (PSDB-G), to next week, which validates the tax incentives granted by states to companies in the process known as “fiscal war”. At the suggestion of Senator Romero Jucá (PMDB-RR), the bill, which is being processed urgently, was only debated. The first session to discuss the matter was scheduled for Tuesday (7).

Jucá claimed that there was no consensus to guarantee the approval of the project, which he considers positive. In order not to risk the overthrow, he proposed that the Senate give more time for an understanding.

The tax incentives re-validation project was the third item on the voting agenda of the day, behind the Biodiversity Legal Framework project (PLC2 / 2015) and the one that requires the reindexing of state debts and mini-principles (PLC15 / 2015), was the subject of a request to move ahead of the other two. With the postponement of the vote, the other projects were also postponed until next week.

- We will have a long discussion here and in the end we will not have the necessary votes. In an attempt to seek a confluence of votes so that we do not risk the defeat of the project and the expansion of legal uncertainty, common sense and balance send us to vote next week - warned Jucá.

In addition, Jucá argued that the validation makes more sense if it goes hand in hand with the reduction and unification of the interstate ICMS rates, a measure that depends on a draft Senate resolution. He proposed that this step should also be taken by the House until next week.

- It is essential to pass a resolution that reduces the rates. Today what is given is an incentive with the resources of other states. It is a perverse model. This issue will be resolved when we level interstate rates - he said.

The president of the Economic Affairs Commission (CAE), Delcídio do Amaral (PT-MS), was in favor of the postponement. He believes that validation is necessary, but insufficient, and that it is worth waiting more before voting if the extra time results in a broader solution to the "fiscal war".

- This is the major reform that Brazil needs. It is very beautiful to confirm, nobody is against it, but it would be a victory for Pirro. If we spend a little more time to work on a more consistent solution, will we lose something? - he pondered.

In the opinion of the president of the Senate, Renan Calheiros (PMDB-AL), the postponement will be beneficial because the senators have already shown themselves willing to seek a definitive conclusion on the topic.

- The Plenary has already demonstrated that it will not evade this discussion. As the matter is important, it is necessary to take time to build a solution that definitively balances the interests of Brazilian states - said Renan.

Critics

The validation would represent the regularization of tax benefits that the states grant to companies so that they can establish themselves in their territories, generating jobs and income and promoting economic growth. To grant these benefits, it is necessary to obtain unanimous agreement from the other states in the National Council for Farm Policy (Confaz). Over the years, many incentives have been offered that do not comply with this standard. Competition between states in the concession is known as "fiscal war".

The senators who oppose the bill argue that the simple validation of irregular benefits, without a broader ICMS reform, would only encourage the “fiscal war”.

- There is a consensus throughout the House on the need for these incentives to be validated, only to do that we have to end the 'fiscal war'. If we do this without voting on an ICMS reform, the consequence is more 'fiscal war' - warned Lindbergh Farias (PT-RJ).

- The project brings innovations that allow the eternity of the 'fiscal war' and that will make any ICMS reform in our country unfeasible, insofar as the states are authorized to grant remission of credits arising from these incentives that were contested without time limit. If a state grants an incentive that impacts the revenue of another, the federation is vulnerable - questioned Aloysio Nunes Ferreira (PSDB-SP).

PSD leader Omar Aziz (PSD-AM) said he was in favor of validation. Despite this, he said he believed that the approval of the project would not do good to the country's already fragile economy.

- Discussing this matter so important to the economy of the states at a glance is not healthy. Brazil is going through a time of fiscal adjustment because it has released exemptions where it could not have done - he said.

Support

On the other hand, the leader of the PMDB, Eunício Oliveira (PMDB-CE), said that the granting of incentives by state governments is just the exercise of the “legitimate right of a government official to do fiscal policy”. Senator Fernando Bezerra Coelho (PSB-PE) said that the poorest states need “instruments to attract private investment in order to generate jobs and income”.

Senator José Pimentel (PT-CE) recalled that the Federal Supreme Court (STF) has already guaranteed that the validation will only be retroactive and will not be valid for future concessions, which would bring legal certainty. In addition, he understands that the project is in accordance with recent Confaz resolutions and is necessary to maintain the competitiveness of Brazilian regions with less infrastructure.

- The project largely incorporates a proposal that Confaz developed. He does not withdraw or add a cent to state public revenues. What he does is to resolve a decision that would break the entire productive sector in the North, Northeast and Midwest - he stressed.

Walter Pinheiro (PT-BA) criticized the federal government's stance in addressing the issue, not adopting definitive positions. He said that the immediate vote on the proposal would send a positive message to the Executive.

- To vote is to signal, including to the government, that we want to help with fiscal adjustment and continue to generate jobs and income in the states - he said.

Tasso Jereissati (PSDB-CE) rejected the thesis that fiscal incentives are entirely responsible for the “fiscal war”. He cited other types of incentives granted to the industry, such as IPI reductions for the automobile sector and for white goods.

- This policy, today, can and should be revised. But it is a mistake to call incentive the sole cause of the “fiscal war”. I want some industry to point me in any state in Brazil that does not have some kind of tax incentive - he stressed.

Source: Agência Senado (31/03)