After veto override, compensation to states for ICMS losses is enacted

O Federal Official Gazette (DOU) This Thursday (22) brings the enactment of measures that compensate states and the Federal District for losses in collection resulting from the limitation of ICMS rates on essential goods and services established by Complementary Law 194, of June this year.

These compensations are provided for in articles that had been vetoed by President Jair Bolsonaro (PL), when sanctioning the law. The vetoes, however, were overturned by the National Congress.

In the enactment, the fifth article was reestablished, which determines that the links to the Fund for the Maintenance and Development of Basic Education and the Valorization of Education Professionals (Fundeb), in addition to revenues linked to health actions and services, will be maintained by the states and municipalities in proportion to the deduction of debt contracts administered by the National Treasury Secretariat.

Article 14 was also enacted, which provides for compensation by the Union in case of loss of resources, so that the constitutional minimums of health and education and the Fundeb of the Federation Entities have the same financial availability as before the complementary law.

Finally, the text determines that the states, the Federal District and the municipalities must maintain the proportional execution of minimum constitutional expenses in health and education, including the allocation of resources to Fundeb, in comparison with the situation in force before the complementary law.

Approved in June by Congress, Complementary Law 194 set a ceiling of 17% for the state tax on several items considered essential, such as electricity, fuel, communications and transport. In some states, rates reached 30%.