Haddad rules out sending MP to raise BRL 90 billion after trial

Finance Minister Fernando Haddad ruled out sending a provisional measure (MP) to boost revenue by up to R$90 billion after the decision by the Superior Court of Justice (STJ) to authorize the collection of federal taxes on tax incentives granted to states. The minister praised the judgment and said that, with the result, it will no longer be necessary to change the legislation.

The STJ’s decision has the potential to increase revenue by up to R$90 billion for some large companies. They will no longer exclude from the calculation base of the Corporate Income Tax (IRPJ) and the Social Contribution on Net Income (CSLL) tax incentives for costing expenses granted to states.

“This decision pacifies the issue. Obviously, we will take other measures related to the (fiscal) framework to give consistency to the Budget and we want them to be taken by August, because then the Budget can be forwarded in August already with a forecast of a balance or close to the balance foreseen in the fiscal framework” , said Haddad as he left the ministry this evening.

For the minister, the judgment score shows that the government’s thesis is right. “I considered the judgment exemplary. The rapporteur’s vote was accompanied by eight other ministers of the STJ. This gives a lot of confidence that we are on the right track to remove from our tax system and litigation what is preventing the pursuit of budgetary balance, ”he commented.

In recent years, several companies have used incentives granted to the Tax on the Circulation of Goods and Services (ICMS), a tax levied by state governments and the Federal District, to reduce the IRPJ and CSLL calculation base. Earlier, the finance minister had said that the device encourages tax evasion by large taxpayers to the detriment of the tax-paying worker.

The measure is essential to reinforce the government’s cash by up to R$ 150 billion and to meet the goals of the new fiscal framework, which provides for the reduction to zero of the primary deficit (negative result of government accounts without public debt interest) in 2024.

The decision of the STJ, however, will depend on the Federal Supreme Court (STF). This afternoon, Justice André Mendonça, of the STF, granted an injunction suspending the decision until the Court judges the case. Despite the injunction, the Justices of the STJ concluded the judgment for not having received the official notification.