Federal government signals that it may compensate states for losses with ICMS, say governors

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Details of the recomposition have not yet been defined, such as the amount to be recomposed to the states and the term and payment method. Governors met with the Minister of Finance this Tuesday. After a meeting with the Minister of Finance, Fernando Haddad, governors said that the federal government signaled that it could compensate the states for losses in collection with the Tax on Circulation of Goods and Services (ICMS). Last year, former president Jair Bolsonaro sanctioned the project that limits ICMS rates on items considered essential, such as fuel and electricity, in an attempt to contain the soaring inflation. ICMS is a state tax and is responsible for most of the taxes collected by the states. According to the governor of Espírito Santo, Renato Casagrande (PSB), the states estimate a revenue loss of up to R$ 45 billion due to the ICMS reduction. “There is already a directive that the federal government wants to carry out the recomposition”, said Casagrande at the end of the meeting with the Minister of Finance. However, according to the governor, the details of the recomposition, such as the value to be recomposed to the states and the deadline the method of payment, are still being discussed. Casagrande said that the Secretary of the Treasury, Rogério Ceron, should meet tomorrow (08) with the State Secretaries of Finance to deal with the matter. The Governor of Rio Grande do Sul, Eduardo Leite ( PSDB), was also present at the meeting. “The Union has its own fiscal challenges, we are also aware of that (…) therefore, I understand that over the next few weeks we will arrive at a negotiation that allows the execution of this compensation to the states “, said Milk.

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