Senate approves compensation of R$27 billion to states due to drop in ICMS collection

The Senate approved this Wednesday (4) the complementary bill that guarantees compensation of R$ 27 billion from the Union for states, municipalities and the Federal District due to the loss of revenue caused by the cut in ICMS on fuels, which occurred between June and December 2022. There were 63 votes in favor, 2 against and 2 abstentions. The text will be sent for presidential sanction.

The proposal had been approved by the Chamber of Deputies on September 14. PLP 136/2023 was sent to Congress by the Executive and received a favorable opinion from the rapporteur, senator Veneziano Vital do Rêgo (MDB-PB). The text was approved this afternoon by the Constitution and Justice Committee (CCJ) of the Senate and went to a direct vote in the plenary, after approval of an urgent request with the support of the President of the House, Rodrigo Pacheco (PSD-MG).

The proposal provides forecasts for transfers to the Municipal Participation Fund (FPM) and the State Participation Fund (FPE) to recover losses from 2023 in relation to 2022. The text complies with the agreement between the Union and the states established by the Supreme Court Federal (STF). In preliminary injunctions, the Court had already ordered the payment of compensation greater than those provided for in Complementary Law 194, of 2022, which cut the ICMS on fuels and energy.

Among the main items of the proposal is the addition to the text, by the Chamber, of a provision for the Union to anticipate compensation, through the delivery of amounts foreseen for the year 2024, according to an act of the Ministry of Finance. The deputies also included a provision to cover the real losses of the FPE and the FPM.

Despite supporting the basis of the project, some senators expressed their opposition to article 15 of the proposal, which would allow the government to stop applying, in 2023, the minimum constitutional value of investment in health and education, reported the Senate Agency. Senator Ciro Nogueira (PP-PI) even presented a prominent amendment, overturned by 15 votes to 11, suppressing the article from the project.

“We cannot approve article 15 in this House. It is unconstitutional, because we cannot change our Constitution… There is no way for this House to come out with this image of having removed more than R$20 billion from health and education, taking advantage of the distress of Brazilian mayors”, argued Nogueira.

The senator also recalled that the government recently consulted the Federal Audit Court (TCU) — still without a response — to question whether the constitutional floor should be applied in 2023, as with the approval of the new fiscal framework, which replaced the ceiling of spending, there is the return of the floor for health and education expenses. Thus, the government would have to invest 15% of net current revenue in health, and 18% of tax revenue in education.

The leader of the government in the Senate, senator Jaques Wagner (PT-BA), pointed out that the person who ended the health floor was not the current government, but the governments that established the spending ceiling, in “function of a rule as simplistic as ineffective”. “This is being done to help the municipalities and states that lost. There are no tortoises here to act as subterfuge”, defended Wagner.