To fill their coffers, states do a disservice to consumers – 01/16/2024 – Maria Inês Dolci

When discussions about tax reform began, there were few certainties, and a suspicion: that, somehow, for some reason, the consumer would pay more for products and services.

Even before the regulation of what was approved by the National Congress at the end of last year, 10 states and the Federal District rushed to increase the ICMS (Tax on the Circulation of Goods and Services). This should make food, clothing, footwear and medicine, among other products, more expensive.

These 10 states are: Bahia, Ceará, Goiás, Maranhão, Paraíba, Paraná, Pernambuco, Rio de Janeiro, Rondônia and Tocantins, in addition to the Federal District.

It is also very likely that VAT (Value Added Tax) will have the highest rate in the world in Brazil: 27.5%.

Brazilian VAT will be in a dual model, with CBS (Contribution on Goods and Services), federal taxation – replacing PIS (Social Integration Program) and Cofins (Contribution for Social Security Financing) – and IBS (Tax on Goods and Services), state and municipal – instead of ICMS (Tax on Circulation of Goods and Services) and ISS (Tax on Services).

In other words, the middle class will continue to have to purchase health plans and private schools; will pay car insurance to avoid losses in the event of theft or accident; toll for using highways, and will incur a super tax on products and services.

Therefore, taxation changes, which becomes more rational and less bureaucratic, simplifying the process, but it does not change the collection drive of public entities. The dream of all rulers — or almost all of them — is to receive a mountain of money in the form of taxes, fees and contributions, to remain in power, through works and various benefits.

VAT will be so high because parliamentarians built numerous exceptions into the reform. And because the Brazilian state is expensive, inefficient and wasteful. The consequences are terrible: the economy grows a little, then falls and becomes stagnant. The generation of new jobs largely occurs in the informal economy, and this vicious circle does not change.

The results appear in stores, supermarkets, pharmacies and street markets. Consumers buy much less than they want and need, because there is no income to pay for expensive products and services. When the card advances, it collides with the revolving credit, and becomes one more debtor among millions.

More expensive medicines (as they will have, in states that increased the ICMS, an additional adjustment beyond the annual one), make healthcare even more difficult. And this gets much worse for those over 60, generally retired, who are unable to purchase everything prescribed by doctors. This scenario will be more challenging when climate change, with extreme events, negatively impacts food production.

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