Toffoli diverges from STF jurisprudence and suspends Goiás agro tax

An injunction by Minister Dias Toffoli, of the Federal Supreme Court (STF), suspended the collection of the State Infrastructure Fund (Fundeinfra) by the government of Goiás, also known as the “agro tax”. The fund was created in 2022 to help cover ICMS tax collection losses, following the approval of Complementary Law 194, under the management of former President Jair Bolsonaro (PL), which limited the rate on fuel, electricity, telecommunications to 17%. and public transport – considered essential and indispensable goods and services.

Toffoli’s decision diverges from the history of judgments in the STF involving the constitutionality of state funds created to finance investments in infrastructure, transport and housing. In most cases, states offer an ICMS tax deferral benefit conditional on the payment of a non-compulsory contribution.

Toffoli responded to the request of the National Confederation of Industry. The CNI questioned provisions of Goiás laws 21,670/2022 and 21,671/2022 that established the payment of the contribution as a condition for taxpayers to participate in regimes of tax benefits or incentives, export control and backward tax substitution. The governor of Goiás, Ronaldo Caiado (União Brasil), who “picked a fight” with the agricultural sector to approve the contribution in the Legislative Assembly, said he respects Toffoli’s decision, but underlined that “it is not final” and believes that “it will be reversed in the plenary of the STF”.

According to Caiado, the projection was to raise around R$ 1 billion with Fundeinfra, which does not fully cover the losses with ICMS, which would reach R$ 5.5 billion in 2023. priority investments in infrastructure, so that they have more logistical competitiveness to dispose of their production”, defended the governor, when commenting on the decision of the STF.

Fee collects 1.65% of soybean sales

Under the system created in Goiás, the tax on soybean sales reached 1.65%. For sugar cane, 1.2%, and for corn, 1.1%. A 0.5% charge had been applied to meats, with the exception of chicken (and eggs), which was exempted.

In his decision, Minister Toffoli highlighted that Fundeinfra seeks to raise financial resources for the economic development of Goiás. However, he stated that the STF has firm case law on the unconstitutionality of linking tax revenue, including ICMS, to an agency, fund or expense, except in cases permitted by the Federal Constitution itself. In practice, Goiás would even be taxing exports, which collides with the federal legislation in force.

Toffoli agreed with CNI’s argument that any taxpayer who defaulted would be subject to “various complications, negatively affecting their activities and the economic chain itself.” In the event of default, “the most diverse fiscal, economic and operational obstacles will arise, such as the impossibility of enjoying the tax incentive, the absorption of costs to enjoy ICMS immunity on export operations without guaranteeing the refund of the amount spent in time reasonable and the highest burden on the taxpayer due to its simple characterization as a tax substitute in an operation related to the merchandise specified in the State Decree”.

SRB has already questioned Mato Grosso’s rate, without success

Toffoli’s injunction, which will still be examined by the plenary of the STF, was granted in the same week that the New Party filed an action questioning the collection of another taxation of agro, in Mato Grosso, which has lasted for more than 20 years. The constitutionality of the State Transport and Housing Fund (Fethab), in force since 2000, has already been contested by the Brazilian Rural Society (SRB). The process, however, was shelved because Minister Gilmar Mendes understood that the SRB had no legitimacy to promote the action, since it accepts other people in its staff, in addition to rural producers.

In 2020, the Associação Brasileira das Indústrias Exportadoras de Meat (Abiec) filed a direct action of unconstitutionality against the fund, which it considers, in fact, a portion of ICMS required for non-collection of export tax. The rapporteur for ADI 6420 is also Minister Gilmar Mendes.

In the judgment of an ADI against the oldest agro tax of all, the Mato Grosso do Sul Road System Development Fund (Fundersul), from 1999, the STF understood that the contribution was not taxable, as it was not compulsory. Thus, “non-submission to the principles and limits of the power to tax” would occur. In the wake of this jurisprudence, new taxation of agriculture emerged in Maranhão, which maintains the State Fund for Industrial Development, and in Tocantins, which adopted the State Fund for Transport. In Paraná, last year Governor Carlos Massa Ratinho Júnior (PSD) even proposed the creation of an agro tax, but after resistance and protests from the sector, he backtracked and the message was shelved.

For the New Party, which questions the Fetab in Mato Grosso, it is a disguised tax, or “a tribute disguised as a background”. Fethab injects R$ 3 billion a year into the Mato Grosso government coffers.