Deputy Sandro Mabel says that the report enhances legal safety by unifying ICMS (Tax on the Circulation of Goods, Interstate and Intercity Transportation and Communication Services) rules

The members of the Special Committee for Tax Reform (PECs 233/08, 31/07 and others) discussed on Wednesday, November 5,  the report from the rapporteur, Deputy Sandro Mabel (PR-GO). During a three-hour meeting, the congresspeople discussed their worries about subjects such as the financing of Social Security, the excessive constitutionalization of the tax system and the need for compensation for occasional tax-collection losses by the states.

Deputies Carlos Zarattini (PT-SP) and Luciana Genro (Psol-RS) stated their worry about the fact that the contributions which currently finance social security are being incorporated by other taxes, according to the report´s text.  Sandro Mabel affirmed that the collection of Social Security will be guaranteed, but warned that the system should seek self-financing.

“Constitutionalization”
Deputy Paulo Renato Souza (PSDB-SP) criticized the report for considering that it constitutionalizes devices that could be dealt with by infra-constitutional legislation. “This way, the Constitution will have to deal with hundredths of percents”, he declared, referring to what he considered as an excessive detailing of the text.

Paulo Renato quoted the article of Everardo Maciel, a former secretary of the Federal Revenue Service (1995-2002), published today in the newspaper O Estado de São Paulo. Maciel says that the Constitution and its transitory dispositions have 260 articles, paragraphs, sub-sections and sub-paragraphs directly about tax subjects. If the report is approved, this amount will be increased to 370, which will increase legal insecurity and tax disputes.

"Many of those devices will lose their effect if they are not included in the Constitution” replied Sandro Mabel. In his opinion, the report increases legal security because it unifies 27 state rules of ICMS and restrains the fiscal war among states.

Congresspeople ask for guarantees from the states
Regarding the combat against fiscal war (competition among states or cities for the implementation of new procedures through the offer of exemptions and tax benefits, which can become a predatory mechanism, since it endangers the collection of local taxes) Deputy Leonardo Vilela (PSDB-GO) warned about the risk that “emergent states” lack alternatives to attract productive investments. “These mechanisms are important to reduce the regional differences, including inside the very state”, he said.
Lelo Coimbra (PMDB-ES) agreed and stated that the report “binds a chain to the legs of the state of Espírito Santo", because it reduces the state´s competitiveness.

Sandro Mabel reminded that the report provides for the development of the National Fund for Regional Development and of the Income Equalization Fund, which have the purpose to recompose the income of the states and of the Federal District, if they drop because of the chances resulting from the Constitutional Amendment related to the Reform.

Meetings
The chair of the Committee, Deputy Antonio Palocci (PT-SP), announced that there will be at least three other meetings to discuss the report. He wants also to hold public hearings with state governors to debate the impact of the proposal on states´ budgets. The congresspeople have already formalized 36 suggestions on amendments by dividing the question in the text of the report.

Report - Rodrigo Bittar
Editing - João Pitella Junior/Rejane Xavier