After little more than two months of negotiations, the Union and the Federation units unanimously closed an agreement to compensate for losses in collection of the Tax on the Circulation of Goods and Services (ICMS) with the exemption of fuels. The federal government will compensate the states and the Federal District by BRL 26.9 billion until 2026.
The agreement was announced by the Minister of Finance, Fernando Haddad; by the secretary of the National Treasury, Rogério Ceron, and by the governor of Piauí, Rafael Fonteles, who represents the 27 governors in the negotiations. According to Ceron, of the R$26.9 billion, around R$4 billion will be paid by the Union this year, and the remainder will be paid in installments by 2025 or 2026, depending on the case.
“It was very unfair what happened last year. This is part of the R$300 billion in problems that the previous government bequeathed us. That [o acordo de hoje] represents only 10% of the problems we are managing”, said Haddad, referring to the fiscal liability with the exemptions that preceded last year’s elections.
According to Haddad and Fonteles, the agreement will be taken to President Luiz Inácio Lula da Silva and to the presidents of the Senate, Rodrigo Pacheco, and of the Chamber of Deputies, Arthur Lira. The minister and the governor of Piauí will also take the terms of the document to the ministers of the Federal Supreme Court (STF) Gilmar Mendes, André Mendonça and Luiz Fux, rapporteurs of the actions involving the two laws that exempted the ICMS from fuels last year.
Phases
Of the total return of BRL 26.9 billion, around BRL 9 billion have already been compensated to the states through injunctions granted by the STF, which suspended the payment of installments of state debts to the Union. In these cases, there will be a reckoning to verify the balance that each Federation unit still has to receive.
According to Haddad, at least two states, São Paulo and Piauí, failed to pay debt installments more than they are entitled to receive. In these cases, specific treatment will be given for the return of overcompensated funds.
In the other states, which have funds to receive, the remaining balance will be deducted from the debt installments with the Union or paid with contributions from the Union (to states with small debts or no debts with the federal government) until 2026
Based on the remaining balance, the money will be paid in installments as follows. States with up to R$150 million in compensation will receive 50% in 2023 and 50% in 2024, with resources from the National Treasury. States with compensation between R$ 150 million and R$ 500 million will receive one third of the amount in 2023 and two thirds in 2024. States with more than R$ 500 million will receive 25% in 2023, 50% in 2024 and 25 % in 2025.
The states in the Tax Recovery Regime – Rio de Janeiro, Goiás and Rio Grande do Sul – will receive the same way as the others, with the difference that they will be able to write off R$ 900 million in the portion of the debts with the Union in 2026. in fiscal recovery, these states are settling their debts with the federal government under special conditions, while carrying out local fiscal adjustment programs.
Historic
In June of last year, the complementary laws 192 It is 194 imposed a ceiling of 17% or 18% (depending on the state) for ICMS on fuel, energy, telecommunications and public transport. Previously, it had stated that it charged more than 30% of ICMS on fuel.
During the processing of the laws, the parliamentarians inserted an article obliging the Union to compensate the losses of collection of the ICMS, tribute collected by the states. The previous government vetoed the device, but Congress overrode the veto, forcing the federal government to pay some compensation starting this year.
At the end of last year, the STF gave 120 days for the Union and the Federation units to reach an understanding. The main difficulty was to estimate the revenue loss. During the negotiation, the account varied between R$ 18 billion and R$ 45 billion. In early February, the National Treasury had announced the intention to pay the compensation in instalments.
“The governors’ account was better supported, but it reached a number that was quite difficult for us to deal with. The repair was between 18 billion [bilhões de reais] and 45 bi [bilhões de reais]. When it’s a deal, it’s never satisfactory to anyone. It is an account that makes based on parameters. Technically, the work was intense and reached a value of R$ 26.9 billion”, explained Haddad.
The governor of Piauí, who until last year was president of the National Committee of Finance Secretaries of the States and the Federal District (Consefaz), praised the negotiations. According to him, the agreement serves as an experience for discussions on tax reform.
“This dialogue took place in a very calm, receptive manner on both sides. I think this will contribute to the new stage, which is the discussion of tax reform. Without a doubt, the states are very interested in this issue, not least because the most complex tax is the ICMS, which really needs to be reformed, and the country to be brought into line with the international experience”, said Fonteles.
