Comsefaz indicates a 4 pp increase in ICMS to compensate for collection losses

The Comsefaz (National Committee of Secretaries of Finance of the States and the Federal District), proposed a 4 percentage point readjustment in the average collection rate of the Tax on Circulation of Goods and Services (ICMS), as a way to recover the fiscal balance of the states Brazilians and the Federal District, following the reductions approved by the government in June 2022.

According to the Committee’s survey, all Brazilian states and the Federal District should end 2022 with budgets impacted by the measures of Complementary Laws 192 and 194/2022, which subtracted revenues from ICMS levied on fuel, electricity and communications.

These items accounted for more than 30%, on average, of all the collection of the system’s main tax, which are the responsibility of the states themselves.

In order to match the volume of resources from previous years, without increasing the gross tax burden, Comsefaz stipulated a table that provides new percentages of collection for the next year, according to the reality of each state, which can be applied immediately.

This resizing tends to neutralize the reduction in resources by approximately R$ 33.5 billion.

The objective of the research carried out by the Committee was to gather the state’s ICMS revenue into three amounts:

• Revenues previously impacted by higher rates on blue chips (fuel, energy and telecommunications);
• That of revenue previously impacted by the modal rate;
• The other ICMS revenues, not affected by either the modal or the higher rates of blue chips.

According to the study, several sectors were harmed by the drop in revenue collection. Investments in health — whether due to the pandemic or the approval of the minimum salary for the nursing category — and those in education, with a review of teaching salaries by Fundeb, are examples of this reduction.

“The need for valuing professionals in these areas and the respective strengthening of the public services they provide is undeniable, so that the states are looking for the most appropriate solution to continue providing these essential services”, declared Comsefaz in a note.