Basic basket, industry and taxes: understand what changes with the tax reform

Approved in the Chamber of Deputies last Friday (7), the tax reform brings as its main gain the simplification of laws and taxes. Marcos Valadão, PhD in Tax Law and professor at the Getúlio Vargas Foundation, understands this. “Taxation will be replaced from five complex taxes to two much simpler taxes. This is the big change, the big simplification that will occur in our system”, evaluates the lawyer.

To get an idea of ​​the complexity of the current system, the Brazilian Institute of Planning and Taxation (IBPT) estimates that 443,236 tax rules were created in Brazil between 1988 and 2021. “As a result of this number of rules, companies spend about R$ 181 billion per year to maintain personnel, systems and equipment to monitor changes in legislation”, points out a study by the organization.

The wording that follows for analysis by senators provides that the five main taxes on the consumption of goods and services will become a single tax: the Dual Value Added Tax (VAT). On the one hand, IPI, PIS and Cofins, under federal jurisdiction, give rise to the Contribution on Goods and Services (CBS). On the other hand, the ICMS, charged by the states, and the ISS, collected by the municipalities, form the Tax on Goods and Services (IBS).

Federal deputy Luiz Carlos Hauly (Podemos-PR) maintains that PEC 45/2019 will reduce expenses for those who produce. “The tax will be lower than what is charged today, because we are going to get rid of all accessory bureaucratic obligations, it will reduce the cost of bureaucracy by 95%”, he estimates.

Aliquot and basic basket

As it is a Proposed Amendment to the Constitution, the rapporteur for the matter, Deputy Aguinaldo Ribeiro (PP-PB), decided that the VAT rate be established by means of a complementary law. It is from this percentage that Brazilians will know how much tax will be levied on products and services. Initial calculations by economists point to something around 25%.

In the case of specific goods and services, the tax reform provides for a 60% reduction in the VAT rate, including education, health, public transport and agricultural products. Already the items of the basic basket had zero taxation. The list of foods contemplated with the exemption, however, will still be defined in a complementary law.

Tax specialist Eduardo Araújo, CEO of Tax All Consultoria Tributária, provides details on how this should work. “This food basket that will be created, the final effect for the citizen is that rice, beans, pasta and other foods that make up the basic food basket will have a zero rate. This tends to generate a cheaper product for low-income citizens,” he explains.

Lower prices for industry

CNI’s executive manager of Economics, Mário Sérgio Telles, considers that the tax reform is a step towards the reindustrialization of the country. This is because, in his view, the proposed model increases the competitiveness of the sector. “We should have a reduction in the industry of around 10% to 12% in taxation, very likely that this reduction will be passed on to prices. Therefore, industrial prices must be reduced”, he comments.

Currently, the Brazilian industry participates with 10% of the added value of the national GDP and contributes with 30% of the indirect taxes charged in the country, according to IBGE data.