States start raising ICMS to make up for the shortfall – 05/03/2023 – Market

This Wednesday (8) the increase in the general ICMS rate for one of the 12 states that raised the tax to cover the gap in revenue left by the tax reduction approved by Congress in 2022 begins to take effect this Wednesday (8).

This week, the change begins to take effect in Piauí. In the following, in Paraná and Pará. Then come Sergipe and Bahia. At the end of the month, in Amazonas and Roraima (see table below).

The change takes effect from April 1st in five other states: Acre, Alagoas, Maranhão, Rio Grande do Norte and Tocantins.

They are currently at 17% or 18% in those locations. The new ones range from 19% to 22%, according to a survey by the company IOB. The increase in the general rate affects most goods and services.

At the end of 2022, 12 states approved raising ICMS rates on various products, as a way to offset the cut in fuel, telecommunications and energy taxes. The items represented 30% of the tax collection.

The cut was articulated by President Jair Bolsonaro in Congress to reduce inflation during the election period.

In 2022, state revenue grew by 1.6% in real terms (discounting inflation). ICMS revenue was practically stable (+0.1%). In exempt items (fuels, telecommunications and energy), there was a drop of 8%, according to data from Confaz (National Council of Finance Policy).

The change in the tribute takes place now, after the ninetieth of its approval has been fulfilled.

Medicines

Among the affected products are medicines, which will also have the annual readjustment authorized by the federal government on April 1 for the entire country. In this case, the ICMS increase automatically implies readjustment of the maximum price that can be charged for products, and the transfer to the consumer depends on each company.

Sindusfarma (Union of the Pharmaceutical Products Industry) asked local governments to exclude medicines from the list of products affected by the change in ICMS, but the state Treasury departments did not respond to requests for the revocation of the rate increases.

“Once again, the consumer will pay the bill”, says the Executive President of the entity, Nelson Mussolini.

Three other states made changes to the calculation base that are already in effect: Minas Gerais, Espírito Santo and São Paulo. This change does not change the maximum price set by the federal government, but it is possible that some companies reduce, for example, the discounts given to consumers.

In São Paulo, after negotiations between the local government and the sector, the reference values ​​for ICMS collection fell to 6,408 medicines and rose to another 1,045, according to Sindusfarma.

São Paulo

On Monday (27), the state of São Paulo reduced the ICMS until December 31, 2024 for several business sectors. Some of the measures had been discussed since the Rodrigo Garcia (PSDB) administration and represent the return of benefits that had been reduced in the João Doria government.

Lawyer João André Buttini de Moraes participated in the discussions on the return of benefits to the soy bran sector, a product used in animal feed, which practically returned to the situation prior to 2019.

Since then, the São Paulo industry has been producing bran only for export, an operation in which it is possible to recover tax credits. Local producers, on the other hand, bought from other states.

“You have a reduction in the cost of soybean meal and, as a consequence, a reduction in the cost of producing animal protein”, says Moraes.