Decentralized collection dismantles tax reform – 07/04/2023 – Market

The decentralized collection of the new IBS (Tax on Goods and Services) in the tax reform could harm the autonomy of the states by making them dependent on other governments to receive their taxes, he says to Sheet the governor of Piauí, Rafael Fonteles (PT).

The PT member, who was once Piauí’s Treasury Secretary, defends the creation of the Federative Council —a body that would centralize the collection of the tax that will replace ICMS and ISS and would transfer it to states and municipalities.

With this position, he opposes the governor of São Paulo, Tarcísio de Freitas (Republicans), who defends a clearing house, according to which the state Executives would continue to collect taxes and only later would pass on the slice that belongs to other states. .

“The collection has to be centralized in the Council, otherwise you dismantle the reform”, he says.

How do you see the movement in São Paulo to change the model of the Federative Council?
The collection has to be centralized in the Council, if you don’t dismantle the reform, it ceases to be a VAT [Imposto sobre Valor Agregado]. We want to make life easier for taxpayers.

[Sem o Conselho] You run the risk of making the system very complicated, because you would have to rely on compensation from one state to another, one state depending on the other to offset the tax due. We think it’s a minority position [de São Paulo]. We consider that the rapporteur has to keep the collection centralized in order to have a true VAT.

Mr. He said that he dismantles the reform if the collection becomes decentralized. Can you elaborate a little more on why, in your opinion, this is a problem for states and taxpayers?
First, this proposal is not so clear about what this format would look like. Will it be a membership? The state that wants to stay with the Federative Council will stay and the one that doesn’t will have to create its own system? Will the taxpayer, when carrying out an internal operation, pay in the state collection system and when he goes to another state, will he pay in another system?

Instead of simplifying, you would be complicating. I don’t think there’s any reason not to do centralized collection, because all the states will be represented on the Council. This already happens to a certain extent with Simples [Nacional]. It’s okay that it’s a simpler model, but it happens, it works well.

One of São Paulo’s arguments is that there is a loss of autonomy. Mr. do you agree?
There is no loss of autonomy. The Interfederative Council belongs to the states, so there is no loss of autonomy. I completely enjoy it.

You get all the benefits that the renovation provides and it does not in any way affect autonomy. On the contrary. In my view, autonomy is lost if one state has to depend on the other to collect its due tax. It’s much better for him to receive from a federative instance, which has everyone’s presence.

How is this articulation within the Governors’ Forum, is there a kind of scoreboard?
At least 20 states have already expressed their support for centralized tax collection. So, like I said, it’s a minority position [pela descentralização]. The issue is not São Paulo. The point is that one state does not have to be dependent on the other. The Council is exactly for that. If everyone agrees with the principle of destiny, how can one state collect and then transfer to the other? It makes no sense.

We have news that the rapporteur is discussing a kind of compromise. What did mr. do you think of this model?
I don’t agree either. I think the model has to be one of centralized collection, as initially proposed by the [Bernard] Appy who is the secretary [extraordinário da Reforma Tributária]and by Aguinaldo himself [Ribeiro, relator da reforma na Câmara]. Any other model will be too complicated and will miss the essence of reform, the essence of VAT.

What is losing the essence of VAT? Does it compromise the possibility of advancing the reform?
Instead of simplifying, you can end up complicating it. It’s one thing for you to discuss the governance of this Federative Council, then that’s fine. But collection has to be centralized for VAT to work in a simplified way.

What would a well-done governance be, in your view?
This issue of the weight between states and municipalities, this can still be improved. I also defend what is in the rapporteur’s text, he proposed 27 states, each with a representation, and 26 municipalities. I defend this format, but it can be discussed to improve.

Mr. Do you see intransigence from the states that want the clearinghouse model?
No. I don’t see intransigence, I think they are small adjustments. It is natural that, at the time the text takes place, each item is discussed in each state about what would be better, the ideal of each one’s position. But it is secondary to the size and positive impact of the reform on the country’s economy.

São Paulo has 70 deputies. If we go to a bench analysis, the Republicans, which is the party of the governor of São Paulo, has 41. There is probably an overlap in these two numbers, but…
I believe that there will not be a definition on a topic of this nature, neither by party nor by state. It’s a complex topic. Obviously, the person in the best position to assess this is the president of the Chamber, whether or not there are enough votes to reach [a aprovação]. I understand that there are, yes, enough votes, because everyone is in favor of tax reform.

It’s time to vote. Even if a state or a party closes a position against or in favor of the text, you will not have unanimity within the state caucus or within the party caucus. Even because there are people who belong to a party, but are in a region that is favorable. If the party states that it is against it and it [parlamentar] he is allied with the governor who is in favor, will he follow the party or the governor?

One point is the issue of returning credits to the taxpayer. In this case, it makes it easier to have a centralized collection, as you defend? Or not?
It makes everything easy. The return of credits, the agility in this process, all those other personalized return systems also for the taxpayer. It will make everything easier, because you have a single system managing all of this automatically.

The Finance Secretary of São Paulo said this Tuesday (4) that one of the fears, if companies have to collect the tax for this centralizing agency, is that there will be a lot of judicialization. Is there that risk?
It’s the opposite, the litigation will get bigger and bigger if we stay in the non-centralized system. This is one of the points that, in my view, will increase judicialization much more. The less simple it gets, the more judicialization we will have.

Is cashback affected by this choice between Board or clearinghouse?
When do you cashback [sob o modelo do Conselho], it doesn’t even have to go through the states if you approve the custom return. So, people with low purchasing power, who are in the Single Registry, receive it automatically. That wouldn’t go into the cake. So, it also facilitates this account, in my view.

Mr. Do you think you vote this week?
Very confident that he will vote this week, tomorrow or Thursday.

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Rafael Fonteles, 38

Born in Teresina (PI), he holds a bachelor’s degree in Mathematics and a Master’s in Mathematical Economics at IMPA (Institute of Pure and Applied Mathematics). He has served as a teacher, entrepreneur, and investment adviser. He was Secretary of Finance of Piauí between 2015 and 2022. In office, he also chaired Comsefaz (National Committee of Secretaries of Finance) between 2019 and 2022. He was elected governor of Piauí in the first round and took office on January 1, 2023 .