Panel SA: Gasoline ICMS cut removes R$ 2 billion from anti-poverty fund

Main flag of the president-elect Luiz Inácio Lula da Silva, the efforts in his mandate to fight hunger and extreme poverty in the country run the risk of losing R$ 8.5 billion, if the STF maintains the reduction of the ICMS charged on fuels and essential services.

The electoral measure was the idea of ​​Jair Bolsonaro (PL) converted into law by Congress. However, the states went to the Supreme Court to question its constitutionality.

Seeking an agreement, Minister Gilmar Mendes created a special commission with members from the states, government and Congress. There was no consensus and, as Panel SA reported, the members asked for an extension of the work so that the conversation could be closed with Lula. Publicly, the president-elect has already defended the states in this dispute.

States are required by the Constitution to maintain an anti-poverty fund. To supply it, it is allowed to use 2% of the ICMS charged on products and services of a superfluous nature.

Until June of this year, fuels were classified as such. However, Complementary Law 194/2022, sanctioned by Bolsonaro in June of this year, began to classify fuels as an essential item.

By that same law, it was defined that the state tax charged on these products should have a ceiling rate of 17%.

This change brought a side effect by preventing the states, to favor the middle class and lower fuel prices at the pumps, by cutting resources to combat poverty.

Among the 27 governors, only those of Amapá, Pará, Roraima and Santa Catarina do not use fuel resources to complement the fund to combat poverty.

According to data from Confaz (National Council for Finance Policy), the other 23 states collected, over the past year, R$ 106.3 billion in ICMS levied on fuels. In other words, the additional 2% earmarked for anti-poverty funds would add up to R$2.13 billion in just one year.

The impact of the legal change on anti-poverty funds was pointed out by Minister Gilmar Mendes, of the STF, who reports on an action in which the Union charges states to reduce ICMS on fuel.

On July 1, in one of his dispatches, the minister wrote that, “in an environment of worsening poverty, there is little concern about the consequences of the adoption, by the central entity, of imposing the essentiality of all the products foreseen in article 1 of LC 194/2022, with the consequent decrease in the fund to combat poverty, at a time of increasing inequality and the level of poverty”.

In the same order, the Minister endorses the thesis of a jurist who considers that “the State must actively fight against any disproportionate impact that a policy of cutting expenses may have specifically on these groups [mais vulneráveis]🇧🇷

In the conciliation process, mediated by Mendes, the Union, states and Congress try to reach an agreement that results in compensation to the states for the loss of revenue in general with the changes sanctioned by Bolsonaro in the ICMS on fuels and also on electricity services and communications.

But there is no specific discussion, so far, about specific offsets on impacts on resources allocated to anti-poverty funds.

The deadline given by Gilmar Mendes for the Union and states to reach an understanding is the next 2nd of December. Last week, the states presented a bill of R$ 25 billion, in the most favorable scenario for the Union, to be paid by the federal government as compensation for losses in ICMS collection since July this year, when the new rules came into force.

If there is no settlement, the minister will have to decide on the matter alone. Formed by the minister, a commission of experts, equivalent to judicial experts, opined in October that the law under discussion is unconstitutional.

Julio Wiziack (interim) with Fernanda Brigatti🇧🇷 Paulo Ricardo Martins and Diego Felix