The Minister of the Federal Supreme Court (STF) Gilmar Mendes granted precautionary measures, on Friday (19) ordering the Union to compensate for ICMS losses in the States of Minas Gerais, Rio Grande do Norte and Acre as of this month.
At the end of last month, the STF had already issued similar injunctions to São Paulo, Alagoas, Maranhão and Piauí.
The recent decisions of the STF obliging the Union to compensate monthly losses of States with the reduction of ICMS rates already have an estimated impact of more than R$ 10 billion in the second half of this year, according to sources from the economic team.
The cost to the National Treasury could exceed R$20 billion, if all state governments obtain similar injunctions.
The reduction of ICMS rates on fuel, electricity and communications – with a ceiling between 17% and 18% – was approved by Congress through Complementary Law 194, which came into force on June 23.
The measure is one of the flags of Jair Bolsonaro’s (PL) re-election campaign, as it led to an immediate drop in fuel prices and electricity bills, leading to deflation recorded in July and expected also for August.
By law, however, the federal government is required to compensate states when the loss of tax revenue exceeds the percentage of 5%, compared to the revenue recorded in 2021.
The economic team argues that the compensation should be based on the entire year’s revenues and, therefore, the eventual settling of accounts should only take place in 2023.
In addition, the Ministry of Economy claims that all states had a nominal increase in collection in the first six months of 2022, compared to the same period last year. With annualized impact, virtually no compensation would be required.
After the first preliminary rulings in favor of state governments, the National Committee of State Finance Secretaries (Comsefaz) said it expected a ripple effect with other governors achieving the same.
According to sources heard by the Estadão/Broadcast, most of the impact of the seven injunctions concerns São Paulo. Minas Gerais –which would also have the right to a higher compensation– was no longer paying any portion of the debt with the Union due to another injunction from the STF under the Fiscal Recovery Regime (RRF) of the States.
Even with smaller impacts in the other states, the assessment by the Ministry of Economy is that the precautionary measures are “very bad”. In any case, the impact of the measures is only financial and should not affect the federal government’s primary result.
Source: CNN Brasil
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