Leite and Cosud governors ask the Minister of Finance for adjustments in the collection of States’ debt to the Union

Governor Eduardo Leite met this Wednesday (11/8) with the Minister of Finance, Fernando Haddad, in Brasília, to discuss adjustments in the collection of the States’ debt with the Union. Points of the tax reform proposal were also on the agenda currently being processed in the National Congress. The text, which underwent changes in the Senate, must return for a new vote in the Chamber.

The meeting was attended by governors Tarcísio de Freiras (SP), Jorginho Mello (SC), Cláudio Castro (RJ), Carlos Massa Ratinho Junior (PR), and the vice-governor of Minas Gerais, Mateus Simões – governor Romeu Zema is in international mission. The States are part of the South and Southeast Integration Consortium (Cosud).

The governors’ main request to the minister is to change the debt indexes of the States with the Union. In the current model, the payments made captured up to 15% of the net current revenue of the federative units, as in Rio Grande do Sul. “This charge compromises our ability to invest in public policies and services for the population. Consequently, it also reduces our collaboration to help with the development of the country as a whole”, stated Leite.

Today, the States’ debts to the Union are adjusted according to the Broad National Consumer Price Index (IPCA), plus a nominal rate of 4% per year. However, the sum of the IPCA at the rate of 4% is limited by the Selic (the basic interest rate defined by the Central Bank). Since the Selic rate remains at a high level today, at 12.75%, the interest charged on States’ debts is not reduced, as it does not reach this limit.

Until September, for example, the accumulated IPCA was 3.49%, which, added to the 4% provided for in the current collection rule, would lead to the States’ debt values ​​being updated by 7.49%, without any reduction, as the percentage is still below the Selic.

As a result, debts rise very quickly. In the case of Rio Grande do Sul, with a stock of R$90 billion, an increase of over R$10 billion in the amount of debt is already estimated, due to this rule involving indexation with IPCA linked to the Selic. “If there is no change, this will mean suffocating the investment capacity of important states of the federation and, consequently, will punish the country as a whole. This is because industrialized federative units with an important participation in the national economy are restricted from making a greater contribution for the development of the country”, reinforced the governor of Rio Grande do Sul.

The Finance Secretaries of the States present and the Secretary of the National Treasury, Rogério Ceron, also participated in the meeting.

South and Southeast defend adjustments in tax reform

Upon leaving the meeting, the governors met the press and also commented on the vote on tax reform currently being processed in Congress. The heads of Executives from the South and Southeast reaffirmed the consensus on the need for a tax simplification reform, but criticized points that they consider to be an imbalance factor, with specific benefits for certain regions. Among these points, the division of the Regional Development Fund and the granting of new incentives to the Manaus free zone and the production of combustion motor vehicles were mentioned.

“Brazil needs to develop as a whole and not generate islands of prosperity. The tax reform as it stands cannot be approved in the Senate. We want the reform, yes, but we cannot allow the Constitution to provide for such huge benefits, advantages and differences between regions”, said Leite.

_{Text: Carlos Ismael Moreira/Secom
Editing: Camila Cargnelutti/Secom}