Government plans to eliminate tax that finances Incra, to relieve wages


The government plans to end the 0.2% charge applied to the existing payroll of companies to fund INCRA (National Institute of Colonization and Agrarian Reform).

The tax is responsible for generating up to BRL 2 billion annually for the agency, two-thirds of the budget planned for 2022.

The extinction of the contribution is in the making at the Ministry of Economy and, according to reports made to the leaf, is part of the plan to broadly relieve the payroll of companies and lower the cost of hiring.

The idea is to present the measure to Congress through a bill.

The act represents a signal to the business community in the year that President Jair Bolsonaro (PL) seeks re-election and also serves as a nod to the ruralist base. During the 2018 campaign, Bolsonaro even classified the MST (Landless Rural Workers Movement) as a terrorist group.

The government is still studying the budgetary and financial impact of the proposal and how to compensate for the measure – a requirement made by legislation.

The idea of ​​abolishing the Cide (Contribution for Intervention in the Economic Domain) Incra, as the tax provided for in a 1955 law and adapted by a 1970 decree is called, follows the plan of Minister Paulo Guedes (Economy) to relieve the salaries paid by companies .

The head of the economic team calls the taxes on the weapons of mass destruction sheet jobs.

Guedes had been trying since the beginning of the government to at least partially replace such charges with a tax similar to the old CPMF (Provisional Contribution on Financial Transactions), but the idea was put on the fridge after being attacked — including by Bolsonaro.

The collection of Cide Incra is made by the Federal Revenue Service, which transferred almost R$ 2 billion to Incra in 2021. When contacted, the Tax Authorities could not inform until the conclusion of this text if the amount is totally related to the tax or if there is some other component.

The system in the relationship between Revenue and Incra is similar to that applied to the S System, which receives a percentage of contributions paid to the Tax Authorities on the companies’ payroll.

The government’s move to end Cide Incra is made less than a year after the STF (Federal Supreme Court) endorsed the charge, giving the Union a win and understanding that the tax is constitutional.

In April, by majority vote, the collegiate followed the vote of the rapporteur, Minister Dias Toffoli, for the dismissal of the extraordinary appeal brought by a metallurgical company.

The company contested the decision of the TRF-4 (Federal Regional Court of the 4th Region), which considered that the additional 0.2% was in accordance with the 1988 Constitution.

“It is constitutional the contribution of intervention in the economic domain destined to INCRA due by the urban and rural companies”, decided the ministers of the STF.

If the result of the judgment were the opposite, the Union could have to return more than R$ 30 billion paid by the companies over time, also considering the resources directed to Sebrae, which were also under discussion.

Luigi Nese, president of the CNS (National Confederation of Services), says that the extinction of the charge is positive for the business community.

“THE [tributo para o] Incra is an aberration because even an urban company ends up paying, and an employee who works in the city has nothing to do with the countryside. I don’t think you have to pay anyone, and that [verba do órgão] it has to come from the Union Budget”, he says.

The CNS defends that the payroll be tax-free for companies and that the corresponding resources be collected through a tax on financial transactions, as defended by Guedes.

Bianca Xavier, professor of Tax Law at FGV (Fundação Getulio Vargas), says that the percentage of 0.2% may seem small, but it makes a difference for companies. “It is an expressive amount. We had a huge dispute in the STF about this contribution”, he says.

On the other hand, he says, the elimination of the charge means less resources for public policies linked to agrarian reform. “Without a doubt, this is an important loss of revenue and the government will have to think of other palliatives”, she says.

The move takes place less than a year after the INCRA summit admitted to the STF, through data, a slow pace of agrarian reform.

As shown by leaf At the time, such a low budget for land acquisition had never been made, taking into account one of the graphs presented, with data for the period from 2011 to 2020.

Incra has a budget of just over BRL 3 billion for 2022, but less than a third will be allocated to central areas for the body, such as monitoring agrarian conflicts, promoting education in the countryside, recognizing and compensating quilombola territories, consolidating of rural settlements, land acquisition, agrarian reform and land tenure regularization.

Most of it goes to a set of other items, such as court sentences, retirements and pensions, in addition to benefits, assistance and aid for civil servants.

According to the MST, the government has not dedicated itself to agrarian reform, and the number of families encamped awaiting land regularization grew from 80,000 to 90,000 in one year.

We are seeing a structural dismantling of agrarian reform

“We are not having settlements or expropriation for the reform. We are seeing a structural dismantling of the agrarian reform”, affirms Alexandre Conceição, national leader of the MST.

For him, the end of Cide Incra is another move in this direction. “He [governo Bolsonaro] gives one more demonstration that it has done away with the agrarian reform budget, that it does not want agrarian reform”, he says.

When contacted, INCRA stated that it would not comment because it had not been included in the debate within the government. “The proposal to cancel the contribution was not discussed with Incra and therefore the institute will not manifest itself”, wrote the autarchy.

The Ministry of Economy preferred not to comment.

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