Congress approves project that authorizes the Union to compensate states for billion-dollar losses with ICMS

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Government must transfer R$8.7 billion in 2023 and R$27 billion by 2025. Losses were generated by measures taken by the Bolsonaro government to reduce fuel prices in 2022, an election year. The National Congress approved this Thursday (9) a project that authorizes the Union to transfer money to states and municipalities to compensate for losses in revenue in 2023. The text is subject to approval by President Luiz Inácio Lula da Silva. These losses in ICMS collection were caused by the measures taken by then president Jair Bolsonaro, in 2022, to make fuel cheaper in an election year. ICMS is one of the taxes levied on fuels and one of the main sources of revenue for states. Bolsonaro sanctioned a law that set a ceiling for the state tax on products such as fuel and electricity, in an attempt to contain the rise in inflation. As a result, the states collected less. The project reserves R$8.7 billion for transfers to entities to compensate for part of these losses, estimated at R$27 billion. Senate approves billion-dollar compensation to states and municipalities for ICMS losses on fuels According to the law sanctioned in October after an agreement reached with the governors and validated by the Federal Supreme Court (STF), the government committed to paying off these R$27 billion in full by 2025 “The PLN will allow, and guarantee that the government this month, transfers so that the end of 2023 will be much less arid for municipal and state administrations”, stated Veneziano Vital do Rêgo (MDB-PB). The transfer of resources provided for in the approved project represents an anticipation of transfers from 2024 to the 2023 financial year. “This government is returning to states and municipalities what was withdrawn in an attempt to gain electoral power by the then President of the Republic, who is now ineligible”, said deputy Erika Kokay (PT-DF). The money to compensate for the losses of states and municipalities comes from the incorporation of the Union’s excess resource collection, in the amount of R$15 billion. Remember the measure adopted by the Bolsonaro government at the end of last year: Bolsonaro proposes tax cuts to lower fuel prices State and municipal funds The text also foresees the transfer by the Union of R$ 6.3 billion to states, DF and municipalities with the objective of offsetting the financial impacts caused in 2023 by the reduction in amounts transferred to the Participation Funds of the States and the Federal District (FPE) and Municipalities (FPM). According to a message sent by the government to Congress, the recomposition will consist of: transferring to the municipalities, in the 2023 fiscal year, the resources referring to the difference between the amounts credited, in 2023 and in 2022, in the period from July to September, monetarily adjusted. transfer to the states, in 2023, of the amount corresponding to the difference between the amounts credited in 2023 and 2022, in the months of July and August, without correction. Ministries The project also opens special credit worth R$ 207.4 million for seven ministries: Agriculture and Livestock: R$ 104 thousand for investment in the Brazilian Agricultural Research Corporation (Embrapa); Culture: R$9 million for direct administration and the National Cinema Agency (Ancine); Defense: R$52 million for direct administration; Education: R$10,800 for the Universidade Federal Fluminense; Justice and Public Security: R$8 million for the National Penitentiary Fund and Federal Police Transport: R$59.9 million for the national Department of Transport Infrastructure; Ports and Airports: R$6 million for the National Civil Aviation Fund. In addition to these, the project establishes the transfer of R$72.3 million to official credit operations. The resources are under the supervision of the Ministry of Finance.

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