Reform may generate a 60% increase in taxes on basic basket items

The tax reform proposal presented last week may cause an increase of 59.83%%, on average, in taxes that fall on the basic basket and hygiene items, according to an estimate by the Brazilian Association of Supermarkets (Abras). The entity’s president, João Galassi, was today (1st), in the capital of São Paulo, with the Minister of Finance, Fernando Haddad, to discuss the impacts of the reform on the sector.

According to the association’s calculations, the states of the South region will be the most affected, if the reform is approved by the National Congress, since the average increase in taxation will be 93.5%. The Midwest and Southeast regions appear next on the list, with expected increases of 69.3% and 55.5%. For the North and Northeast regions, the increase should be 40.5%, 35.8%.

In the survey, products such as rice, beans, meat, eggs, vegetables, among others, were considered. Abras took into account the adoption reduced by 50% over the expected standard rate of VAT (Value Added Tax) of 25%, which is under discussion.

The possibility of having price increase of basic products had already been anticipated by a specialist consulted by the Brazil Agency. The text on the tax reform focuses on the simplification and unification of taxes on consumption and the creation of the Regional Development Fund, with an amount of R$ 40 million, to allocate funds to projects in states with less budget. The rapporteur for the matter, which should be voted on in the Chamber of Deputies this week, is parliamentarian Aguinaldo Ribeiro (PP-PB).

At the end of the meeting, the Extraordinary Secretary for Tax Reform, Bernard Appy, countered the Abras figures, saying that the level of taxes levied on the basic food basket should remain in line with what exists today, even with the reform. Appy stated that the calculation of the association “does not inform”, but “disinforms”, because it leaves out part of the positive effects that the redesign of taxation should cause.

“First, it’s not that they are saying that there will be a 60% increase in the basic basket. What they are saying is that the tax burden, the amount that is levied on the basic basket, would have an increase of 60%, by their accounts. By this type of reasoning, if I have a rate of 0.1% and it goes to 1%, it increased by 900%. Second, even the account they brought is wrong. Why? The account that Abras made simply took it from From the point of view of the current taxation of the margin of supermarkets, in the sale of basic basket products, of PIS Cofins, they estimated, based on the rates of each state, what would be the impact of adopting a rate that was 50% of a basic rate , which is what is foreseen in the PEC”, he said.

“Their calculation problem: first, they do not consider all the tax residue corresponding to all the previous stages of production and the tax cost that falls on the products is the entire cost, from the producer to the consumer, including all the tax that is paid, including the tax that is not recovered in all these stages. Second point that fails in their reasoning: they only looked at the taxation of the margin of products in the basic basket, they forgot to include in their calculation the cost reduction that supermarkets will have due to the basket basic, for the recovery of credits that today they do not recover. Today, for example, they do not recover any credit from the tax levied on the electricity used in the supermarket, on the service he uses to outsource labor, on what he buys for his asset immobilized. Every investment you make is taxed and they don’t recover credit,” he added.