Tax reform harms agriculture, says governor of MT – 7/5/2023 – Market

In the opinion of Mauro Mendes (União Brasil), governor of Mato Grosso, the state with the greatest weight in agricultural production in Brazil, the tax reform presented in the Chamber of Deputies would be harmful to the sector, as it would raise taxes on rural producers.

He cites, for example, a higher charge for fertilizers, which are inputs for agro production.

“I find it difficult and unnecessary [que a Câmara vote o projeto nesta semana]. A subject as profound and as comprehensive as this one deserves many reflections”, he said in an interview with Sheet.

The ruralist caucus is one of the most influential in Congress. Sector representatives have articulated for parliamentarians to oppose the reform.

Will the tax reform be harmful or beneficial to the agro?
As it stands, we have no doubt that it will be harmful to the Brazilian agro, to the Brazilian citizen and will increase taxes when it is definitely implemented.

Is there an idea of ​​how much the increase in taxes to rural producers would be?
In Mato Grosso, our estimate is that production costs will increase by around 8%.

Why would there be such an increase?
We have, for example, fertilizers, which pay 2% ICMS. With the reform, this could increase to 12.5%. It is an estimate, because the rate was never clearly stated. So this points to an increase in taxation [para o setor]. This goes for inputs, for the entire chain [produtiva]. This becomes credit, but there is an effective increase during the production period until he can sell, get these credits back. And there will be a loss of collection by the states with ICMS, because some items, such as diesel oil, will enter the credit and debit chain.

What about the basic basket? How will you do with it?
It would have a clear and effective increase. This varies from state to state, but in Mato Grosso, meat pays 2% ICMS and would increase to 12.5%. Sugar and rice pay zero today and would also increase to 12.5%. Congress needs to quickly change this, otherwise it would be absurd to make this increase in the basic food basket.

O sir presented this study to the ruralist group?
Yes. The bench’s perception is that this topic is very complex, it is a topic that deserves and needs to be studied in greater depth so that the decisions that will impact the lives of all of us are made. It is something that cannot be presented like this.

Proponents of the reform say the proposal has been under discussion for a long time, it came from the previous government.
This is not true. For 40 years in Brazil there has been talk of tax reform. But the text of this reform, which is what matters, was delivered 10 days ago. During these years we were discussing concepts, assumptions. But what is the text in practice? What is the impact on the lives of citizens, companies, the market, governments? Only a clear and objective text can give these answers.

What are the demands of the government of Mato Grosso and the ruralists so that the reform can then be voted on?
On the part of the state government, it is necessary that there be a slow transition, until 2032. It is important so that the state does not have to return money for tax incentives that were granted at a cost, with support even from Congress. We also want to maintain the possibility of having regional development mechanisms, of infrastructure investment preserved in those states that have them. And also that the regional development fund can correctly capture, through fair rules, the need for Brazil to continue fighting the differences that exist between Brazilian regions. The South and Southeast are more developed regions in terms of infrastructure than the North, Northeast and Midwest.

O sir do you see the possibility of voting later this week?
I find it difficult and unnecessary. A topic as profound and as comprehensive as this deserves many reflections. Walking through the National Congress, I saw hundreds of questions and few answers. The vast majority of all Brazilians and parliamentarians still know very little about the subject. And it’s not mature enough to make such an important decision.

Allies of the mayor, Arthur Lira (PP-AL), say that Mato Grosso is against the reform because it would lose Fethab collection, which is a fee for the State Fund for Transport and Housing.
My role is as a governor and as a citizen. And I see that there are very bad points for the country, such as the complete exemption for exports. Exporting companies that profit billions will stop paying taxes. How are you going to deal with the taxes that they pay today in jail and will no longer be paid? If they won’t pay, someone will pay to make up for it.

One of the demands of the ruralist group is the maintenance of the Kandir Law [que isenta do ICMS as exportações de produtos primários].
This is important and is maintained. Exports need to be exempted. only that [no projeto] there was an expansion of this exemption chain. Large exporters, in addition to trading companies, benefit from this reform.

The Lord Do you see that reform is being contaminated by political polarization?
It has absolutely nothing to do with it. I didn’t feel in the conversations that I had any kind of ideological bias. What exists at the moment is a great lack of knowledge on the part of the majority of parliamentarians about the true effects and consequences of the reform.

How is the relationship between agriculture and Lula after six months in office?
I cannot speak for the whole of agriculture, despite being governor of the state that has the greatest weight in national production. It is a government that uses the same model it used in 2003, of setting up a collision base, distributing ministries, trying to create a broad base of political support.

That model in the current Congress may not work very well. And six months is still a short period to make an assessment both positive and negative. We need to give it more time to see the results. Any evaluation has to be based on the results delivered to the sector and the Brazilian population.

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Mauro Mendes Ferreira, 59
Governor of Mato Grosso for the second term. Born in Anápolis (GO), he graduated in electrical engineering at UFMT (Federal University of Mato Grosso). He was president of Fiemt (Federation of Industries of the State of Mato Grosso) and mayor of Cuiabá (from 2013 to 2016).