Bolsonaro sanctions law that sets fuel cap for ICMS, but vetoes rule in favor of states

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The President vetoed the compensation of lost revenues for the five states without debt to the Union; The ICMS cap applies to fuel, energy, telecommunications and public transport

BRASÍLIA – President Jair Bolsonaro sanctioned on Thursday 23 the 17% ceiling for ICMS on fuels, electricity, telecommunications and public transportation, approved last week by Congress, but vetoed sections included by the Senate that would benefit states in compensating for lost revenue from the tax. The sanction of the law, with vetoes, appears in an extra edition of the Federal Official Gazette (DOU).

The project is part of the Palácio do Planalto offensive to reduce fuel prices, but has faced resistance from the governors, who predict a fiscal crisis in 2023 with the reduction of ICMS tariffs. The Senate, where the heads of the state executive have more bargaining power, has responded to some claims made by the finance undersecretaries, now vetoed by the president.

Bolsonaro vetoed, for example, compensation for the loss of revenue for the five states without debt to the Union, which would be done in 2023, with resources from the Financial Compensation for Mineral Exploration (CFEM) and with priority in the borrow from the Union.

In this way, the compensation will be made only for the States that are indebted to the Union, through debt cancellation, when the loss of the ICMS collection exceeds 5%, compared to 2021. This reimbursement will be made on a temporary basis, for six months .

The president also vetoed the determination that the Union compensate states and municipalities for maintaining the constitutional minimum expenditure on education and health compared to what was in place prior to the entry into force of the roof law.

In the sanction of the law, Bolsonaro has maintained the zeroing of federal taxes, such as PIS / Cofins and Cide, on gasoline and ethanol.

Source: Terra

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