States evaluate whether to retain at least 10% of the tax incentives granted to companies. Convention No. 31, of the National Council for Farm Policy (Confaz), authorizes them to adopt the measure so that the percentage is allocated to funds related to “development and fiscal balance of the States”. So far, at least four state governments say they intend to adhere to the practice: Rio de Janeiro, Rio Grande do Sul, Alagoas and Santa Catarina. In Santa Catarina, the retention is estimated to contribute to an increase of R $ 150 million in the State's annual revenue. According to the Finance Secretary, Antônio Gavazzoni, however, the agreement will only be useful if all States apply the measure at the same time. "If a state is left out, it will invalidate the agreement because the reduction would mean competition between states and a new fiscal war would come," he says.
Congressman Ricardo izar (PSD / SP), presented on December 17, 12, Bill 15/4169, which amends Complementary Law 15/24, which deals with agreements for the granting or exemption of ICMS, for determine that taxes due on tax incentives granted without Confaz approval may be canceled or charged.
The proposal is awaiting dispatch to the permanent commissions.
Evandro Guimarães, president of ETCO and Eduardo Cunha (PMDB-RJ), president of the Chamber of Deputies
ETCO and a group of political, business and worker leaders met yesterday (10/06) with the president of the Chamber of Deputies, Eduardo Cunha (PMDB-RJ), to reiterate the request for commitment in the approval of PLP 54 / 2015, which deals with the validation of tax incentives and the remission of past debts of the States related to differences in ICMS rates.
“We are committed to the search for an appropriate, transparent and negotiated policy for the issue of regional development and for the issue of tax incentives related to the ICMS. The effective processing of PLP 54 is an important step that facilitates the progress of other measures for the solution of the fiscal war and, for the resumption of regional investments ”, said Evandro Guimarães, president of ETCO.
After weeks of intense discussion between parliamentarians and negotiations with the Ministry of Finance, the Senate Plenary approved on Tuesday (7) the validation of tax incentives granted by states to companies. There were 63 votes in favor, 7 against and 1 abstention. Two amendments presented at the Plenary were incorporated into the text, which now goes to the Chamber of Deputies.
PLS 130/14, by Senator Lúcia Vânia (PSDB-GO), validates the tax benefits (generally related to ICMS) that states offer companies to settle in their territories, generating jobs and income and promoting growth economic.
To grant the 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".
After the approval of PLS 130, the Plenary rejected the request for inversion of agenda presented by senators from São Paulo, Marta Suplicy (PT), Aloysio Nunes Ferreira (PSDB) and José Serra (PSDB). PLC 15/2015 - complementary, which changes the state debt index, remains as the third item on the agenda, after the draft Biodiversity Law (PLC 2/2015).
Contents
The convalidation bill, which had already been approved last year by the Economic Affairs Commission (CAE), was voted as a substitute offered by the rapporteur, Senator Luiz Henrique (PMDB-SC). In addition to regularizing all existing tax incentives, the text changes the rules for offering new ones, ending the requirement for unanimity in Confaz. Now, the consent of two thirds of the states or one third of the states of each region is required.
Rules are also presented that the benefits granted must follow from the new measures, as conditions for their validity and maximum term that the concession can last.
Two amendments, by Lúcia Vânia and Senator Ricardo Ferraço (PMDB-ES), were approved to complement the project. Ferraço's amendment highlights the incentives granted for commercial activities, which may extend for up to five years. In the previous version of the project, only one year was allowed.
Lúcia Vânia's amendment, on the other hand, cancels the punishments provided by law for states that granted incentives without authorization from Confaz. These punishments will be removed in the case of debt forgiveness of the companies receiving the benefits. The objective is to prevent companies from having to pay ICMS if the incentives they received are considered illegal. The project also seeks to prevent the unpaid ICMS from the states of origin being subsequently charged by the states of destination.
Next Steps
The president of CAE, Delcídio do Amaral (PT-MS), warned his colleagues that it is necessary not to close the matter only in the approval of the validation. According to him, it is necessary to think about a broad reform of the ICMS
- We have a big homework ahead of us. The ICMS reform is 70% of the tax reform. It passes through the Senate, the federal government, the states and Confaz. It needs to be a negotiated solution. The decision does not end in today's session - he warned.
Senator Ronaldo Caiado (DEM-GO) was concerned about the pace of processing the proposal in the Chamber. He proposed to condition the quick analysis of the validation by the deputies to the approval, in the Senate, of the new index of the debts of the states and municipalities. Thus, he believes, it will be possible to guarantee agility.
- We only have one condition to make her walk in the Chamber: we link the approval to the vote here on the debt renegotiation. Otherwise, we will approve the validation here, it would arrive at the Chamber, it would not have continuity, and our states [would be] unable to react - he asked.
Abstention
The only abstention recorded in the vote was that of the project's own rapporteur, Luiz Henrique. He said he held a meeting with Confaz, about a month ago, in his office. In it, the members of the council asked him that an eventual decision by the Senate would wait until the 11th, when the state finance secretaries will try to reach a consensus on the subject.
As the Senate vote took place earlier, said the senator, his abstention vote would be a way to honor the agreement with Confaz.
- Although I was the original rapporteur for the matter that reached the Senate, my vote will be abstention. It is the vow to keep my word - he justified.
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.
The Senate Plenary approved last Wednesday (25) the entry into an emergency regime of PLS 130/2014, which promotes the validation of tax incentives granted by states to companies. As a result, the project gains priority to be voted ahead of others and is no longer subject to regulatory formalities such as deadlines and interstices, and may be completed more quickly.
The decision to put the project in urgency was taken at a meeting of senators with the Minister of Finance, Joaquim Levy, this morning. The forecast now is that the proposal will already be put to a vote next week.
- This decision is a wise decision and I hope that the project will be approved as quickly as possible - celebrated Senator Luiz Henrique (PMDB-SC), rapporteur of the matter and author of the substitute that will be voted by the Plenary.
The validation will represent the regularization of tax benefits that the federation units grant to companies so that they can establish themselves in their territories, generating jobs and income and promoting economic growth. Many of these benefits were offered in disagreement with current rules, which senators consider very strict, and there is competition between states in the concession - a phenomenon that is known as "fiscal war".
- This debate started back there. It has to do with regional development and strengthening the economies of emerging states. Not validating them puts at risk a whole set of tax incentives that benefited the country's economic deconcentration - commented Senator Ricardo Ferraço (PMDB-ES).
For a state to be able to grant tax benefits to companies, it is necessary to obtain unanimity among all units of the federation in the National Council for Farm Policy (Confaz). For Senator Delcídio do Amaral (PT-MS), president of the Economic Affairs Commission (CAE), this rule benefits states like São Paulo and Rio de Janeiro, which are more attractive to companies and can veto the incentives promoted by others on their own.
- The other states are concerned with the validation, which is a threat over the heads of all units of the federation. We cannot lose this agenda - he urged.
Omission
Ferraço defended the need for the Senate to reach a consensus on this matter soon. He criticized the federal government for not having touched on the subject yet, and recalled that Minister Joaquim Levy had promised to bring proposals for the topic even before taking office, but he has not yet done so.
"So we have no other choice but to go ahead and fulfill our responsibilities," he said.
Walter Pinheiro (PT-BA) also lamented the lack of dialogue between the Executive and Congress regarding the matter. He still hopes that there can be a joint action between the powers to promote a wide-ranging reform in the federal pact, which covers the fiscal war, but sees no possibility of Congress not acting, even if alone.
- If the government does not present anything by Tuesday, then be patient. [Minister] Levy is still there and we are still here. I would not like this scenario. Contributions must not run parallel, they must converge. But that process had been defined since before - he resigned himself.
Review
Senator José Serra (PSDB-SP) said he believes the urgency is dangerous, as it would speed up the process of the project without due discussion. He sees the proposal as incomplete, as it does not include other aspects of a broad reform of the federal pact, such as the unification of the interstate rates of the ICMS and the creation of a regional development fund.
"This project, as it stands, will greatly increase confusion in the country," he warned.
It was hit by Senator Lúcia Vânia (PSDB-GO), author of the original project, who recalled that the text had already been widely discussed by CAE and was even included in the Plenary's voting agenda in December. Senator Luiz Henrique also defended the bill's maturity.
- The federal government authored a package of tax and tax reforms that provided for all this. With this proposal we just reaffirm the government's intention - he argued.
The parliamentary recess is approaching, but there is still an expectation that the Senate will vote this year on a bill that helps in the effort to end the fiscal war between states. Those who defend the approval recall that the new governors will be able to take office on January 1 with a new orientation, which can help a lot in the development of the country as a whole.
The expectation comes from November 4, when the Senate Economic Affairs Committee (CAE) approved the fifth substitute presented by Senator Luiz Henrique (PMDB-SC) to the original project of Senator Lúcia Vânia (PSDB-GO), PLS130 / 14. The substitute authorizes the National Council for Farm Policy (Confaz) to validate the tax incentives granted to States, even without unanimous decision, as required today.
Senator Luiz Henrique's substitute avoids the risk of unconstitutionality of the bill presented in April (PLS 130/2014), by Senator Lúcia Vânia (PSDB-GO) and predicts that an agreement for the validation can be signed with the support of two thirds of the federated units and one third of the federated units in each of the five regions of the country. The change in quorum applies only to the validation of tax incentives, forgiveness of tax credits arising from disputes between States and eventual reinstatement of benefits.
This approval is the initial step towards pacifying the issue of tax incentives through legislation. ETCO defends the immediate mobilization of parliamentarians for the end of the fiscal war, as the solution must be sought in Congress, where an agreement is possible, with concessions between the interested parties, as was the case in CAE.
The vote on PLS 130/14 can avoid the resolution of the fiscal war by the Federal Supreme Court (STF). The Supreme Court has already ruled in 29 Direct Unconstitutionality Actions (ADIs) that incentives granted without the consent of Confaz are unconstitutional and may place the Binding Summary Proposal 69 on the agenda. The text considers the ICMS tax incentives granted without prior unanimous approval to be unconstitutional. do Confaz. If the Binding Summary is edited, all the organs of the Judiciary and the direct and indirect public administration, at the federal, state and municipal levels, are obliged to adopt this consolidated STF orientation.
This situation - of a bill pending in the Senate and a binding summary that can be edited - causes legal uncertainty that results in paralysis of investments in the country. clear for future incentives, companies have left projects aside.
Shortly after approval by the CAE, the Confaz Coordinator, José Barroso Tostes Neto, stated that the agreement to vote on the substitute was possible because the government was willing to start discussions for the reform of the ICMS. The creation of Regional Development and Compensation Funds is essential to compensate for losses by States.
The path of the new federative pact is outlined and the first step has been taken. It remains to advance the approval of the text that legalizes the tax incentives created by States and the Federal District and, subsequently, the ICMS unification projects and the creation of funds, so that the instruments to stimulate development are all aligned.
The CAE (Senate Economic Affairs Commission) approved on Tuesday (4) the validation of tax benefits granted by States to attract investments, within the so-called fiscal war. The text must be voted on in the House plenary this Wednesday (5), and then go to the Chamber of Deputies.
The bill aims to maintain incentives related to ICMS (Tax on Circulation of Goods). To this end, they will be revalidated based on new legislation that changes the quorum for approval of these benefits.
The STF (Supreme Federal Court) has already decided that they can only be granted by unanimous decision of Confaz (National Council for Farm Policy), an organ that brings together the state finance secretaries.
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