Lula says it is possible to ‘settle’ ICMS with governors – 01/27/2023 – Market

President Luiz Inácio Lula da Silva (PT) said this Friday (27) that he considers it possible to ‘settle’ the issue of ICMS with the governors, who complain about the drop in collection after the entry into force of the law that limited the rate of this fuel tax.

The speech took place during a meeting with governors at the Planalto Palace. Such as Sheet showed, the payment of compensation by the Union to the states due to losses in collection with the change in the ICMS (Tax on Circulation of Goods and Services) on fuels is one of the main items of the meeting.

Lula stated that the government will not omit itself from the discussion on the tribute.

“The issue of ICMS is something that is on your mind [governadores] since it was approved by the National Congress and it is something that we will have to discuss. We can agree, we can say that it cannot or that it can, but we will not stop discussing any matter with you”, said the president.

With the aim of reducing fuel prices in the country in an election year, Congress approved a bill that limited the ICMS rate on fuel, energy, transport and telecommunications to 17%. The proposal was articulated by the mayor, Arthur Lira (PP-AL), then an ally of then-president Jair Bolsonaro (PL).

During the procedure in Congress, a trigger was inserted that allows states to write off debts with the Union if they had losses greater than 5% in state tax collection. The text of the rule, however, left room for different interpretations.

The main disagreement between the Union and the states is how to calculate this compensation. Governors have been pointing out problems with the drop in revenue, and some states have already obtained injunctions and are reducing their debt installments. The Union, in turn, does not agree with some claims.

Before the meeting with Lula, some governors defended the recomposition of ICMS revenues.

“I hope that the conditions for survival of the states and, at the same time, of the municipalities are restored. Today the only source of collection we have is the ICMS and this needs to be recovered or replaced”, stated the governor of Goiás, Ronaldo Caiado ( Union Brazil).

The governor of Espírito Santo, Renato Casagrande (PSB), was another who highlighted the importance of the topic. “This is the subject that we are most distressed about, because last year’s decisions took R$ 33.5 billion from state coffers. It’s good that we can address this issue in this first meeting.”

For him, it will still be necessary to hold other meetings with ministers Fernando Haddad (Finance) and Simone Tebet (Planning and Budget) on the issue. “There is no possibility, for example, of discussing a tax reform and implementing it without the states recomposing their revenues”, he stated.

According to the governor of Rio Grande do Sul, Eduardo Leite (PSDB), the revenue of the states was heavily impacted by decisions taken “in a haphazard and wrong way” in the pressure of the electoral moment.

For him, the recomposition of resources is a “critical” theme for the states at this moment. “We welcome the initiative to talk about works, about investments and we are going to talk about them. But it is important that structural issues are discussed”, he said.

“It’s no use, on the one hand, for us to have relevant works going on and, on the other hand, for the states not to be able to pay the basic bills in the provision of services in the area of ​​education, health, security for their citizens”, he continued.

At the meeting with the governors, Lula also reaffirmed that the BNDES will once again become a development bank and that it will finance projects that states and municipalities consider a priority.

“I intend to make the BNDES go back to being a development bank. And for that, you have to be patient and competent and, if necessary, lend money for governors to complete works considered inevitable for the state”, he said.