About 98% of municipalities should collect more with tax reform in 20 years, calculates CNM

The tax reform, approved in the second round early this Friday (7), will increase the collection of approximately 98% of Brazilian municipalities in 20 years. The estimate is based on data from the Institute of Applied Economic Research (Ipea) and updated by the National Confederation of Municipalities (CNM). According to calculations by the entity, which represents 5,202 affiliated cities, only 108 may lose resources with the modernization of tax laws.

PEC 45/2019 had an expressive vote, above the 308 votes that were needed. In the first round, 382 deputies said yes, and 375 in the second round. The proposal still needs to pass the Senate’s scrutiny. In the understanding of federal deputy Zé Vitor (PL-MG), the new legislation creates opportunities for the growth of the Brazilian economy.

“We are advancing, creating a more efficient country, a country that fights taxes, a country that has a better business environment, a country that wants to simplify and reduce bureaucracy. We voted to give the country a chance to grow, to stimulate development. We are zeroing taxes on basic basket products, several medications are being exempted. We are going to build a more efficient and fair Brazil”, highlighted the congressman.

In general terms, the current model of taxation on consumption is complex and makes it difficult for businesses to survive. To make life easier for taxpayers and entrepreneurs, the reform proposes the unification of the five taxes on consumption by a Dual Value Added Tax (VAT). In practice, two taxes. Federal taxes (IPI, PIS and Cofins) would give rise to the Contribution on Goods and Services, the CBS, while the ICMS, which is the responsibility of the states, and the ISS, which is the responsibility of the municipalities, would form the Tax on Goods and Services, the IBS.

Lawyer specializing in tax consulting and government relations Maria Carolina Gontijo believes that simplification should generate “a very large space for economic and development gains”. “There are numerous studies about it, we manage to improve the economy, and by improving the economy, then we see what we can do to equalize this load, so that it is not so high. That is why I focus a lot on the issue of simplification and the issue of people’s perception. If we have that, I think it’s already a step towards a fairer system”, he contextualized.

The proposed amendment to the Constitution projects a seven-year transition from the current to the new tax system. Another transition that the deputy of the rapporteur, deputy Aguinaldo Ribeiro (PP-PB), brings is the one that changes the incidence of the tax from the origin of the product or service (where there is manufacture) to the destination (where there is consumption by people). . The suggestion of the PEC is that the change takes up to 50 years.

If approved by senators without amendment, the text also creates the Regional Development Fund (FDR), a solution found to compensate states and municipalities that, today, reduce taxes to attract investments. In the manner being discussed by parliamentarians, this fiscal waiver becomes unfeasible. The Union is willing to fund the FDR in up to R$ 40 billion from 2032, but the states ask for more resources.