untitled design

Understand the impacts of the possible reduction of ICMS to 17%

The president of the Chamber of Deputies, Arthur Lira (PP-AL), said that he will put to a vote next Tuesday (24) the bill that classifies fuels, electricity, telecommunications and transport as essential goods and services, with maximum ICMS rate of 17%.

According to information provided by the economics analyst at CNN Priscila Yazbek, the impacts of the ICMS reduction to 17% can come on two fronts: on prices and on state collection.

With ICMS at 17% for energy and fuel, the reduction in inflation could reach 1 percentage point, assess André Braz, from FGV, and economists at investment brokerage Nova Futura.

The calculation was based on the weights of each state in the IPCA, which measures the country’s official inflation, multiplied by the reduction in ICMS.

In the last month of April, the index marked 1.06% in the rise in prices — the highest value for the period since 1996. According to the report, the rise was mainly driven by food and transport. In the case of the latter, fuels increased the value, especially gasoline.

The collection of the states, in turn, indicates another scenario regarding the reduction of the ICMS ceiling. According to XP calculations, the estimate is a loss of around R$ 60 billion. For researcher Sergio Gobetti, the loss would be R$ 70 billion. Comsefaz, a collegiate body that brings together the state finance secretariats, expects a loss of R$ 100 billion in public coffers.

In the short term, the impact of the ICMS cap at 17% is to reduce consumer prices – which, according to economists consulted, may be appropriate at the moment.

In the future, however, the decrease in state revenue may generate problems for spheres that depend on public accounts, such as education and health services.

Yasbek explains that the state is experiencing high revenue due to high inflation, rising oil and the freezing of salaries in the states. But public accounts were severely affected by the pandemic and that there is this momentary relief also because of the measures taken during the period of facing Covid-19.

*Under supervision of Thamara Kaoru

Source: CNN Brasil

You may also like

Get the latest

Stay Informed: Get the Latest Updates and Insights

 

Most popular