Haddad guarantees that municipalities will not lose revenue with the new tax

The minister repeated current statements that the IBS, which works as a kind of Worth Added Tax (VAT), is not going to scale back the revenues of 90% of metropolis halls. Haddad reiterated that VAT is essentially the most adopted mannequin on the planet, along with bringing extra simplicity and transparency to the tax system.

“After I suggest VAT, which will be twin (one for the Union and one other for states and municipalities) or not, it’s a clear, honest and easy tax. VAT is not going to scale back municipal revenues in any respect; 90% will keep in precisely the identical place, as it is going to be charged on the vacation spot (place the place the products are consumed)”, declared the minister.

Haddad identified that the talk on the influence of tax reform on municipalities is being affected by noise. “They’re creating ghosts that should be confronted in frank dialogue. I’m right here to resolve the nation’s drawback, not the Union’s drawback, ”he stated.

The minister in contrast the creation of the IBS to the Fundamental Schooling Upkeep and Improvement Fund (Fundeb). In response to the minister, for the reason that introduction of the fund, in 2003, the tax burden has not elevated, with solely minor changes. “There’s a disorganization of ICMS and likewise of federal taxes”, he stated.

Historic

The 2 proposed amendments to the Structure (PEC) of the tax reform, PEC 45 (from the Chamber) and PEC 110 (from the Senate), provide for the unification of several taxes in the IBS. The Chamber’s proposal brings collectively two contributions – the Social Integration Program (PIS) and the Contribution for the Financing of Social Safety (Cofins) – and three taxes – the Tax on Industrialized Merchandise (IPI), the Tax on the Circulation of Items and Providers (ICMS) and Providers Tax (ISS).

The Senate proposal creates two taxes: the Contribution on Items and Providers (CBS), which might stay with the Union, and the Tax on Items and Providers (IBS). CBS would exchange the Contribution for the Financing of Social Safety (Cofins), the Social Integration Program (PIS) and the Civil Servant Asset Formation Program (Pasep).

The Tax on Items and Providers (IBS) would exchange the Tax on the Circulation of Items and Providers (ICMS), collected by the states, and the Tax on Providers (ISS), which is the accountability of the municipalities. The proposal didn’t unify the Tax on Monetary Operations (IOF), the Contribution for Intervention within the Financial Area (Cide) and the training allowance within the new federal tax.

At the moment, the contributions stay fully with the Union, the IPI is shared between the Union and native governments, the ICMS stays with the states; and the ISS, with the municipalities. The Nationwide Entrance of Mayors, an entity that represents 415 massive and medium-sized municipalities, is towards the creation of the IBS. The entity defends PEC 46/2022, authored by Senator Oriovisto Guimarães (Podemos-PR), which might solely unify laws for ICMS and ISS, however would preserve the autonomy of metropolis halls and state governments to determine charges and administer the gathering.

Easy Nationwide

The finance minister denied that small merchants could be harmed by the creation of the IBS. Haddad reiterated that companies included in Simples Nacional is not going to be lined on this part of the tax reform. In response to the minister, approval of the reform may enhance the nation’s reindustrialization and convey an influence of as much as 20% of GDP.

“We wish to reindustrialize the nation, and this sector will profit, sure. This reform has an influence of 20% of GDP. She goes the fitting manner. Any economist is aware of,” he stated.

On the finish of the assembly, Haddad reaffirmed {that a} doable definitive exemption from the payroll will solely be mentioned within the second semester, being processed along with the reform of the Revenue Tax.