The State government, in a press conference held on the afternoon of this Tuesday (30/4), announced that the alternative to restoring revenues in the coming years will be through the review of tax benefits, with a partial start this Wednesday (1 °/5), and other measures that will come into force in January 2025. The objective is to ensure that Rio Grande do Sul remains in a position to qualify service provision, make investments necessary for the advancement of the economy and maintain fiscal balance.
“Changing the benefits was not our first alternative, but despite having built a pact for the future of the State in dialogue with representatives of the productive sectors, the measures were not accepted. With the same commitment and seriousness with which we have been leading the State since the beginning of the administration, we cannot allow a return to a situation of imbalance in the accounts after the revenues that were taken from us”, said the Chief Secretary of the Civil House, Artur Lemos.
Alongside the head of the Finance Secretariat, Pricilla Santana, and the State Attorney General, Eduardo Cunha da Costa, Lemos emphasized that in the last five months the State government promoted an important debate, fulfilling its responsibility to society, due to of the revenue losses that RS faces due to complementary laws 192 and 194/2022 imposed by the Union, in addition to a sequence of tax reductions promoted by management since 2021. The recovery of revenue with the new measures will be approximately R$ 845 million in 2024, gross value without discounting the transfer to municipalities and the increase in Devolve ICMS.
“In addition, we reinforce our commitment to the people of Rio Grande do Sul and we will begin, in May, the expansion of the fixed installment of Devolve ICMS, to compensate lower-income families for the impacts that will be generated from the changes caused by the review of tax benefits ”, added Lemos.
Pricilla highlighted that among the changes foreseen in the decrees published in December 2023, the Fruition Adjustment Factor (FAF), which aims to stimulate domestic purchases, is among the actions postponed to January 1, 2025. “There is no change now, but at the beginning of next year it will return to 100%, which will generate dynamism for the economy. The animal protein sector remains suspended from the FAF until January 2025, as we know about the impacts that several producers that we heard from are currently suffering,” she explained.
In the case of the re-encumbrance of food, fruits, vegetables and eggs will remain exempt until December 31, 2024. In relation to the deposit in the State fund of part of the exemption on agrochemicals, it will be limited to 20%, being applied progressively and starting at 10%.
In May, there will be an extraordinary deposit of Devolve ICMS for the more than 600 thousand beneficiary families, who from now on will receive R$150 quarterly. The fixed installment supplement, for May and June, will be R$33.33 (R$16.66 for May and R$16.66 for June). The payment date, scheduled for the end of next month, will be announced in May.
Furthermore, to increase revenue collection and provide fiscal and financial mechanisms so that the State continues to fulfill its obligations, providing quality services and promoting investments, further expenditure adjustments will be made, including a planned 10% cut in tax benefits. in 2025.
SUMMARY OF CHANGES
Food reimbursement
The decree adjusts the Tax on Circulation of Goods and Services (ICMS) rate on a list of foods. With the measure announced and which will come into effect this Wednesday (1/5), products previously exempt or with a reduced tax base (whose effective rate was between 7% and 8%) will have the tax burden adjusted to 12% , with the exception of fruits, vegetables and eggs, whose rate adjustment will only take effect in January 2025.
It is important to highlight that families with incomes of up to three minimum wages or half a minimum wage per capita with Bolsa Família will not be affected by variations in food prices due to increases in transfers from the Devolve ICMS program. Furthermore, families that receive Bolsa Família (around 600 thousand families currently) will have an increase in purchasing power with the compensation.
Deposit of part of the exemption into the State Reform Fund
The decree provides for the deposit of up to 20% of the benefit amount into a state fund. Initially, the measure covered 64 economic sectors, however, after dialogue with economic entities, the government announced the withdrawal of 63 segments from the application of the decree, keeping only the agricultural pesticides sector. It is important to highlight that states with a strong agricultural vocation, such as Mato Grosso and Goiás, have a similar model of linking the use of tax benefits.
Fruition Adjustment Factor (FAF)
The measure will only be applied in January 2025 and will expand a determination that has already been in force since 2021, conditioning a part of the tax benefit called presumed credit, to the volume of purchases made in Rio Grande do Sul. With the change, 100% of the concession of the presumed credit will be subject to FAF rules. Currently, 15% are linked to the measure, which will cover 31 sectors.
The FAF is an instrument provided for by the National Council for Financial Policy (Confaz) and implemented in the State with the approval of the Legislative Assembly. The main objective of the measure is to strengthen and protect the internal market. The suspension of the FAF for the entire animal protein sector in the State also continues until December 31, 2024.
Expansion of the fixed installment of Devolve ICMS
Devolve ICMS will undergo an increase in its fixed installment, which until now was R$100, rising to R$150 quarterly. The more than 600 thousand beneficiary families will receive R$600 per year, in addition to the variable portion, which is determined based on the income of the family responsible and consumption, identified by the CPF included in the tax documents at the time of purchases.
People registered with CadÚnico who receive Bolsa Família or who have a family member in state public education are entitled to Revolve ICMS. This ICMS redistribution model is unprecedented in Brazil and is important to reduce the burden of this tax on low-income families in RS.
In practice, those who earn less contribute less to the tax. Furthermore, Devolve ICMS encourages formality and local commerce. In other words, with the program, the State government is returning to the most vulnerable families an amount greater than what will result from the food repayment.
Text: Juliane Kerschner/Ascom Sefaz
Editing: Rodrigo Toledo França/Secom
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