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On Thursday (23/06), President Jair Bolsonaro approved, with vetoes, the project that limits the Tax on the Circulation of Goods and Services (ICMS) on items such as diesel, gasoline, electricity, communications and public transport.
Inflation Control
The sanctioned law is one of the federal government’s bets to try to contain the soaring inflation, especially in fuel, this election year. According to the text approved by Congress, these items are now classified as essential and indispensable, which prevents states from charging a rate higher than the general ICMS rate, which varies from 17% to 18%, depending on the location. Until then, fuels and other goods that the project benefits were considered superfluous and paid, in some states, up to 30% of ICMS.
Criticisms and Vetoes
The proposal received criticism from states and cities, which estimate a loss of revenue of up to R$ 83 billion. In an attempt to mitigate the governors’ resistance, the Congress approved some provisions that provided for partial compensation mechanisms to help the states, however, some of them were vetoed by President Bolsonaro. The vetoes will still be analyzed by the National Congress. Among the vetoed rules is the one that provided that, in case of loss of collection caused by the ICMS ceiling, the Union should compensate the states and cities.