Pressed by the governors, the rapporteur for the reform of the Income tax, deputy Celso Sabino (PSDB-PA), evaluates new changes in the proposal, considered the second stage of the tax reform.
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In a meeting this Thursday with state finance secretaries, he said he is evaluating the creation of triggers to reduce corporate income tax.
The purpose of the changes is to reduce resistance from the states, who fear they will lose revenue with the reform. Governors began to mobilize against the proposal.
At the meeting, Sabino said that he is studying to propose a smaller reduction in the IRPJ, if the tax collection is below inflation. In this scenario, the drop would be 7.5 percentage points (pp) in the IRPJ next year. The tax would drop from 25% to 17.5%.
In addition, there would be a reduction of 2.5 pp per year in 2023 and 2024, totaling a reduction of 12.5 pp. This scenario would only be achieved with a collection below inflation.
If the collection is greater than inflation, what is in the current text of the rapporteur is valid: a drop of 10 pp in 2022 and another 2.5 pp in 2023.
This was the “trigger” cited by Sabino after a meeting with the Minister of Economy, Paulo Guedes, this Wednesday. The mechanism designed by the rapporteur is a way to guarantee that the tax reduction for companies will not represent a drop in revenue for the other entities of the Federation.
Sabino also said he will present calculations to prove that the reform will not reduce state and municipal tax revenues. Chamber President Arthur Lira (PP-AL) has also denied the possibility that the reform, which he supports, will harm states.
The text is expected to be presented next Tuesday at the leaders’ meeting. Lira’s goal is to vote on the matter as early as next week.
Governors calculate a loss of R$ 27 billion for states and municipalities with the text presented by the rapporteur for the reform of the IR.
Losses would occur on two fronts. First, because the IRPJ collection is shared with states and municipalities through the participation funds (FPE and FPM). And then because the reform also provides for the readjustment of the Personal Income Tax (IRPF) table. Part of the IRPF of servers withheld at source remains with states and municipalities.
After the dissatisfaction of the governors, the rapporteur met with local secretaries this Thursday. The meeting was considered positive by people who participated in the conversation.
The secretaries even proposed to reduce the CSLL (which has a 9%) rate, instead of the IRPJ, but the government and the rapporteur do not agree. The Social Contribution on Net Income is part of Social Security revenues and its reduction would widen the gap in Social Security.
The deputy was to send a preliminary text to the National Confederation of Municipalities (CNM) and to the National Committee of Secretaries of Finance of the States and Federal District (Comsefaz) showing the mechanism.
The president of Comsefaz, Rafael Fonteles, said that he would only speak after having access to the rapporteur’s text, but he praised the meeting.
The government’s initial proposal was that the project would have a neutral impact, without increasing or reducing revenue. There would be a drop of 2.5 pp in 2022 and 2023. After criticism from businessmen, the rapporteur cut the corporate income tax (IRPJ) from 25% to 12.5%. Most of this amount will be offset by the creation of tax on dividends and the end of some exemptions.
The cuts in tax incentives proposed by the rapporteur for certain sectors, such as aircraft and pharmaceuticals, which will bring extra revenue only to the federal government, as they are non-shareable contributions.
Sabino has defended that the collection will grow together with the economic activity caused by the reduction of the tax burden and that, therefore, States and cities will not have losses. However, he promised to create mechanisms to avoid losses.