Deputy Reginaldo Lopes, coordinator of the Tax Reform WG in the Chamber of Deputies| Photo: Chamber of Deputies

The coordinator of the tax reform working group, Deputy Reginaldo Lopes (PT-MG), stated that one of the negotiations around the proposal under discussion in Congress, provides for a transfer of R$ 48 billion per year to the fund that will compensate States and municipalities for possibles collection losses. The statement was given to Estadão, this Tuesday (4).

The amount of the transfer had already been negotiated in the last legislature for the 10-year period (R$ 480 billion) of the so-called Regional Development Fund, but it ran into resistance from the former Minister of Economy, Paulo Guedes.

Lopes pointed out that among the proposals to supply the fund is a 5% portion of the federal Value Added Tax (VAT) (the new one that will be created to replace PIS, Cofins and IPI). The other option is a combination of a portion of federal VAT and a percentage of the “excess” national VAT collection, the Goods and Services Tax (IBS). Through the proposed reform of taxes levied on the consumption of goods and services, the IBS will unify the ICMS (main state tax) and the ISS (municipal taxes) in a dual taxation model: federal and national VAT.

A study released by the Institute for Applied Economic Research (Ipea) on tax reform, in 2020, pointed out that 18 states and the Federal District will have more revenue; and 8 states will lose revenue at first. Furthermore, Ipea shows that poorer cities will gain, while richer municipalities will lose revenue.

Regarding the tax reform working group in the Chamber, the deputy denied any “protagonism dispute” and said that he is in dialogue with the Senate, and that “there is no dispute between the opposition and the government in relation to tax reform”.