Compensation to states for losses with ICMS can be staggered, says Leite

The governor of Rio Grande do Sul, Eduardo Leite (PSDB), left the meeting yesterday with the Minister of Finance, Fernando Haddad (PT), in Brasília. At the meeting, among the topics discussed was compensation, by the Union, for losses resulting from changes in the ICMS, resulting from complementary laws 192 and 194, which limited the collection of fuel, electricity, transport and communication taxes.

“In all themes, whether those that give rise to some kind of discussion with the STF (Federal Supreme Court) or those that directly concern the Ministry of Finance, Haddad showed interest and willingness to forward a solution”, said Leite after the meeting.

Before the meeting, in conversation with journalists, Leite defended the immediate execution of an ordinance, edited, in 2022, by the Ministry of Economy. The ordinance regulates the compensation format, by the Union, predicting that this compensation should be applied from 2023, based on the nominal comparison of monthly collections during the second half of 2022, through the reduction in installments of the debt with the Union. Furthermore, with adherence to the Fiscal Recovery Regime (RRF), the State would be entitled to full restitution of losses caused by Complementary Federal Law No. 194. States that did not adhere to the regime, in turn, would be compensated only if the drop in tax collection was greater than 5%.

“We are discussing this compensation, whether it will take place over the course of this year, over two years, three years or even the entire mandate. All parties are willing to negotiate and I am very confident that we will find a way to definitively resolve this issue,” said the governor.

The secretary of Finance, Pricilla Maria Santana, and of Planning, Governance and Management, Danielle Calazans, accompanied the governor to the series of meetings in the district capital. Today, a new meeting, involving the state secretariats and the National Treasury Secretariat should take place so that both the format and the time of compensation are defined.

“What may be the solution for Rio Grande do Sul, for example, such as reducing debt payments, would not work for states that do not have this debt with the Union. These are specific situations that demand studies for the forwarding of a solution that involves all states”, explained Leite. And he went on: “The states demonstrate willingness for this scaling. I don’t know if it is possible to reach the four years, possibly it has to be a shorter period. We know that the Union has its own fiscal challenges, but the Union must also be aware of the difficult situation of the states”.

In addition to the audience with Haddad, Leite had meetings with ministers of the Federal Supreme Court (STF), which will continue today. Among the topics discussed was the exclusion of the Tariff for the Use of the Distribution System (Tusd) and the Tariff for the Use of the Transmission System (Tust) from the ICMS calculation base on electricity bills. According to Piratini, the non-incidence of ICMS on these charges means a monthly reduction in tax collection for the State of around R$ 240 million.

Another issue of interest to the State, discussed both with the Minister of Finance and with the Ministers of the Supreme Court, refers to the debate in the STF involving the beginning of the collection of Difal (Differential Rate) of ICMS. Scheduled for April, the judgment on the matter will decide whether the collection of Difal (the ICMS portion due to the state of destination in interstate operations) could have been made in 2022, as claimed by the states, or just this year, as taxpayers support . Before the discussions were interrupted by Minister Rosa Weber, the score was 5-3 for charging to be allowed from 2023. If this result is confirmed, amounts charged retroactively could be returned.

The governor of Rio Grande do Sul, upon arriving for a meeting at the Ministry of Finance, said that the states’ tax collection losses with ICMS are between R$ 18 billion and R$ 45 billion. According to him, only Rio Grande do Sul has almost R$ 7 billion to receive.

“The states were hit by a decision by Congress that affected ICMS collection. The result is that we have difficulty maintaining basic services to the population. We came here to discuss how compensation will be from now on”, declared the governor.

The losses stem from complementary laws 192 and 194, which limited the collection of ICMS on fuel, electricity, transport and communication. “The ordinance that the Union edited at the end of last year would deal with a compensation of around R$ 18 billion. The states argue that this calculation can reach R$ 45 billion. that does not burden the union too much and also does not leave the states in a difficult situation”, added Leite.