In addition to governors, mayors fear losing resources with tax reform

Discussion of the tax reform project, stuck in the Chamber of Deputies due to lack of consensus and which the president of the house, Arthur Lira (PP-AL), intends to vote on until Friday (7), is strongly criticized not only by governors, but also by mayors. They fear that the inclusion of the ISS, municipal tax, to the future IVA (Value Added Tax) or IBS (Goods and Services Tax) will decrease the collection.

This is because there is still no clear indication of how much of the future new tax will be passed on to states and municipalities, a discussion that will be postponed after the reform project is approved. The current text does not even define what the tax rate on products will be, which will be defined later by the Senate.

Edvaldo Nogueira (PDT-SE), president of the National Front of Mayors and mayor of Aracaju, explains that future transfers of what would be the ISS within the VAT will still depend on votes in the legislative assemblies of the states.

“Is the state law going to establish the resources for the municipalities? Municipalities have no power in legislative assemblies,” he said in an interview with GloboNews this Wednesday (5).

According to him, it is commented that the VAT will have a transfer of 14% to the states and 2% to the municipalities. “What security do we have that city halls will not lose taxes”, he questioned.

A group of mayors met with the president of the Chamber on Tuesday afternoon (4) to discuss the text of the tax reform project.

According to the mayor, the ISS today has a rate that varies from 15% to 17% on products and services sold in municipalities, which finances expenses with health, social assistance and early childhood education, among others. Health expenditures, for example, have investments ranging from 21% to 30%, while the Constitution defines a minimum of 15%.

There was an attempt to remove the VAT tax, but the reform’s rapporteur, Aguinaldo Ribeiro (PP-PB), denied the municipalities’ request.

Still according to Nogueira, municipalities with more than 80,000 inhabitants and the capitals will be the most affected by the approval of the tax reform without a breakdown of transfers. “The Constitution gave the cities the guarantee of managing their taxes, and the reform takes it away”, he says.