Defender of the approval of the tax reform, which is currently being processed in the Federal Senate, the president of the National Confederation of Municipalities (CNM), Paulo Ziulkoski, states that Brazilian cities will not lose in revenue if the Proposed Amendment to the Constitution (PEC) is approved. ) 45.
According to simulations carried out by the confederation, after 20 years, 88% of municipalities would gain in revenue and 12% would lose, while, after 30 years, there would be no losses for any municipality.
In this interview with Commerce NewspaperZiulkoski talks about the main municipal demands on the tax issue and the points that can still be changed in the reform by the National Congress.
Jornal do Comércio – What are the main municipal demands in tax reform?
Paulo Ziulkoski – Firstly, I would like to say that we need tax reform. But what would be of more interest than municipalities is the discussion of the so-called tax and fiscal reform. In other words, where does the money raised go? For what? Why are taxes paid? At the moment the idea is to build the cake and then distribute the pieces to each person, and it remains complicated for the municipalities which are, let’s say, the poorest part in terms of revenue. Secondly, note that this is a reform about consumption. There is still no talk of et and income reform. Consumption comes mostly through ICMS (Tax on Circulation of Goods and Services). Last year, in nominal terms, there were R$701 billion in ICMS collected in Brazil. On the part of the municipalities, ISSQN, last year, raised R$102 billion in nominal terms. Therefore, I am talking about a service tax, which will be called IBS, which will be around R$803 billion as a revenue base. Some cities in Brazil, mistakenly, and led by two larger cities, which would be São Paulo and Rio de Janeiro, ended up entering the discussion without really knowing what is happening. These municipalities, in theory the big ones, do not want to participate in the reform.
JC – Is there a chance of a loss of revenue for the municipalities?
Ziulkoski – There are two concrete possibilities. If what we are imagining is preserved, 88% of municipalities would gain and 12% would lose if it came into force today. In the simulation we carried out, in the 20 years in which it will be gradually implemented, only 108 municipalities would lose. At the age of 30, no one loses more. There is no loss over the years for practically any municipality.
JC – Do you believe that the reform will end up resulting in a boost to the Brazilian economy?
Ziulkoski – There is no doubt. Everyone knows about the tax madhouse that exists today. Each state has legislation, there are thousands of laws. It is being simplified and will become another environment. For example, ICMS is a regressive tax. So, this means that a large businessman pays the same taxes on a kilo of coffee as a person who earns half the minimum wage. I would say that some principles, such as changing origin and destination, preserving autonomy… because they say we are going to lose autonomy. You will lose nothing, on the contrary, you will have even more autonomy. Today, a municipal inspector basically only inspects IPTU (Urban Property and Land Tax), IPVA (Motor Vehicle Property Tax), which is what the municipality charges, and also services. Not now, it will collect on the entire et base as well. Everything sold in the market will be subject to municipal taxation. It expands and maintains autonomy, in our understanding. An important point that we achieved in the Confederation (National of Municipalities) was exactly in the part of the so-called federative council. This is where the big discussions will really take place. Today, only the states meet, the municipalities do not participate. Not now. The council will consist of 54 members, 27 from states and 27 from municipalities. Of these, 14 will be an indication by nominal vote with the same weight for municipalities with 5 thousand inhabitants or 12 million. The other 13 are also from municipalities, but according to population criteria.
JC – The federative council has been the target of controversy, including drawing criticism from governor Eduardo Leite (PSDB).
Ziulkoski – It’s just that the pipe bends your mouth, I’m not talking specifically about the governor of Rio Grande do Sul. I’m talking about all of Brazil. You have to be patient to discuss with the municipalities. You can no longer act in an authoritarian way like they do today in ICMS, you have to have participation. We have already achieved the main victory, let’s see if the Senate now confirms it or not. If the governor, let’s say, of Roraima, which has 1 million inhabitants, wants to debate the governor of São Paulo, which has 38 million, then it’s a matter between them. We want what has already been approved (in the Chamber of Deputies). As for the governors, it is something that has to be resolved between them. Now, the council has to exist.
JC – What will be, in practice, the changes with reciprocal tax immunity for municipalities?
Ziulkoski – Today, when the city hall buys a truck, patrol car, ambulance, everything that is a tax is already included. With this, you would be exempt from this tax burden. And it will apply to municipalities, states and the Union. This is already in the report, it has already been approved. Let’s see if it holds up, as everything is being discussed.
JC – What changes are being prepared for IPTU?
Ziulkoski – Today the IPTU is about ets. Buy a property for R$1 million and the city hall cannot set R$1 million as the base price for IPTU. She has to put the historical price. There is no update. After much discussion, the Supreme Court (Federal Court) decided a few years ago that, to increase IPTU, there must be a law. Law is not a decree, it is not an update plan. It’s law. Then when the mayor sends the law (to the Legislature), there is no vote. Now let’s put it in the Constitution that it is mandatory to update it, because there is no point in opening a real estate tax fraud like that.
JC – How does the CNM currently position itself in relation to the reform?
Ziulkoski – The CNM’s position is for continuity. We have to reach the end, there is no turning back. Because we don’t have the strength to say whether we want it or not. There is a national awareness that there must be tax reform. Let’s see what can be done.
JC – The Senate is precisely discussing changes to the text approved by the Chamber of Deputies. How have senators received municipal agendas?
Ziulkoski – We’ve been talking. The idea is to never say no, right? Of course, writing is a little different afterwards. We have been monitoring the amendments we need to make, and there are several. Let’s wait. I can’t say what the Senate will do. It will probably change some things and, with that, the text returns to the Chamber, so I don’t even know if the reform will be approved this year.
JC – Have the federal government, the Minister of Finance, Fernando Haddad (PT), and even President Luiz Inácio Lula da Silva (PT) himself been open to municipalist agendas?
Ziulkoski – No. They don’t even look much at the municipalities, unfortunately. What the Union wants is to grab more and more resources. If she could take away everything the municipalities have, she would, I have no doubt about that. Whatever government it is, it is not the Lula or (Jair) Bolsonaro (PL) government, it is any of them. The Union is always very voracious. She wants everything for herself.
JC – You mentioned the reform of ets and income. Do you believe there is room to debate the tax matrix itself?
Ziulkoski – I have no doubt that the next step is, once approved (the tax reform), then enter into the et and income reform. This will be added to the voting agenda next. Now, it is not mixed, because then it becomes a much bigger pandemonium to be able to deal with.
JC – Is the CNM preparing a mobilization to face the financial crisis in municipalities? What are the origins of this crisis?
Ziulkoski – The problem is historical, not today. The cup has been spilling for a long time. A few years ago, which municipality had a health center? None. It was all from the State. The schools, the rural schools, belonged to the municipalities. The urban ones, all the big schools, everything was owned by the State. Everything we had was from the State and the Union. This was all being ped on. Now there are so-called competencies, and everything has accumulated in the municipalities. They take over positions, take over schools, provide school transport that didn’t exist to combat school dropouts, lunches for everyone, with the fantasy of having full shifts, social istance. Then, they make a law in Brasília and p everything to the municipality. Everything accumulated, and the Union must and does not pay the states too. The Union owes us more than R$50 billion in concrete, day-to-day things.
JC – Another issue that affects municipalities are adverse weather events, such as the floods that affected Rio Grande do Sul. Do you believe that the Union should have a greater role in these issues?
Ziulkoski – If the public authorities have the duty to organize society and act where it is most vulnerable, most in need, it is obvious that it has to act in this part. But when it comes to paying the tax, what is paid to the city hall? Today there is a discussion in the municipalities in the Interior that are creating a tax for garbage, of R$ 20.00, R$ 30.00. It’s a war. The Union does what it wants. They vote on a constitutional amendment worth R$130 billion because someone promised it in the campaign. Not in the municipality. And who explodes?
JC – Another municipalist issue is the social security issue. There is a proposal to reduce the employer’s INSS rate paid by municipalities. What would be the impact of this measure?
Ziulkoski – In Rio Grande do Sul, we have 340 municipalities that have what is called their own fund. There are around 157 that are under the general INSS regime. It is a State where the bottom predominates. In others, not so much. Today, the debt of Brazilian municipalities, of the group that owes to the Union, amounts to R$203 billion. Bahian municipalities owe R$40 billion. The municipalities of Rio Grande do Sul owe R$1.8 billion. Everyone has a reality. What Bahia is proposing, and we support: reducing the rate from 20%, 21% and 22% to 8%, 10%. This has an impact of R$11 billion on the Union. They don’t want to and will probably change. We are negotiating another way to compensate the municipalities.
JC – How?
Ziulkoski – But this is the question of the tax rate. In Rio Grande do Sul you would not have these benefits. Another amendment that I proposed would have to be made, to transfer to the municipalities and city halls the same pension reform that was made for the Union. Because this is a mockery of the federation, doing it for the Union and not doing it for the municipalities. Then the municipalities can’t approve anything, because the councilors don’t vote on anything because the public employee lobby is very strong. These municipalities that have their own funds have very high actuarial liabilities and owe a lot. Here in RS, it’s based on R$7 billion or R$8 billion. If you transfer, this deficit will be reduced by 40%. This leaves money in available revenue.