ICMS cut could take R$ 1 billion from USP, Unesp and Unicamp

The limitation of the ICMS rate (Imposto sobre Circulação de Mercadorias e Serviços) on fuel, energy, telecommunications and public transport is expected to cause an annual loss of R$ 14.36 billion for the state of São Paulo.

In education alone, the state estimates that Fundeb (Fund for the Maintenance and Development of Basic Education) would not receive around R$ 2.87 billion in São Paulo, if the bill is approved as it is. The payroll of the State Department of Education today is R$ 1.2 billion.

The calculations were made exclusively by Sefaz-SP (Secretariat of Finance and Planning) and also point out that public universities in São Paulo —USP, Unicamp and Unesp— should have significant losses with the ICMS limitation.

Together, the three institutions may not have resources estimated at R$ 1.03 billion per year. USP has a budget of R$ 7.572 billion. Unicamp, on the other hand, has a budget of 3.787 billion; Unesp, of R$ 3.788 billion, according to the state government.

For the other states, the loss of revenue can also jeopardize the functioning of local education networks, says a note from the Todos pela Educação movement.

“If there is a fall [estimada] ICMS collection of R$ 83.5 billion throughout the national territory, this will mean a reduction of up to R$ 16.7 billion in Fundeb state funds, causing severe difficulties, especially for municipalities that depend on this public policy.”

For health, the impact in São Paulo is estimated at R$ 1.29 billion – an amount that would be enough to finance the Cancer Institute for two years or six 200-bed hospitals, according to calculations by the secretariat.

The remaining R$ 9.17 billion of the loss estimated by the São Paulo government are not earmarked resources, but serve to fund investments and other actions and services in the areas of public security, social assistance, transport and qualification.

“To change the ICMS in this structural way is irresponsible. When the price of oil starts to fall, the tax base of the states will have been eroded”, says the Secretary of Finance and Planning of the State of São Paulo, Felipe Salto.

“It is the federal government wanting to take a measure that will not affect the price for the consumer, since any effect will be eroded by the evolution in the price of oil. What was done was to elect an enemy, it is the governors’ fault, but the numbers do not confirm this narrative”, adds Salto.

In May, the Chamber approved, with the support of the Bolsonaro government, a bill that classifies fuels, natural gas, electricity, communications and public transport as essential goods and services. With this, it would be worth understanding the Federal Supreme Court that limits the incidence of the tax to a range of 17% to 18%. The bill is under discussion in the Senate.

Now, states are working to seek alternatives that reduce fuel prices and minimize their impact on the population’s cost of living, without causing damage to the budget, says the secretary.

Salto says it would be important to guarantee resources for the people most affected by the increase in fuel prices, such as drivers, truck drivers and low-income families – those who most feel the effects of rising food prices.

“The Union has gained the most so far, with dividends from Petrobras, and it needs to be willing to share these resources in the form of public policy”, he says.

Last week, a report pointed out that the state finance secretaries were considering proposing the creation of a fund to compensate for losses with the reduction of ICMS. This “cushion” would consist of Petrobras dividends, oil royalties and special participation in the production of the commodity.

This amount would no longer enter the coffers of the federal government. To prevent this loss, the states’ proposal provides for an increase in the CSLL levied on oil. Today, the contribution is at 9%.

It would rise to 30% if the price per barrel exceeds US$ 80. Below that, the rate would be 20%. With that, the federal government’s losses would be zero, calculate the state secretaries.

This Monday, President Jair Bolsonaro (PL) announced a cut in federal taxes on gasoline and ethanol, and that the federal government would be willing to compensate the states for the reduction in ICMS. The measures would add up to a subsidy of up to R$50 billion, according to government sources.