Macaé Gains Rights in Tax Reform to Set Rates for the IBS, Tax Substitute for ICMS and ISS

Macaé Embraces Tax Reform Allowing Its Own IBS Rates, A Landmark That Offers Autonomy And Also Provokes A Debate About The Possibility Of Higher Reference Charges

Macaé, a city in Rio de Janeiro, received authorization with the recent Tax Reform to set its own rates for the Tax on Goods and Services (IBS). This new tax emerges to replace the ICMS (Tax on Circulation of Goods and Services) and ISS (Tax on Services), unifying them. While proponents of the new system argue that it ensures autonomy for states and municipalities, critics contend that it may encourage a higher reference charge, complicating the simplification of the National Tax System.

Autonomy And The Critics Of The Reform

The critics of the Tax Reform use this format to highlight their objections to the proposal, stating that this autonomy could potentially undermine efforts to simplify the National Tax System. However, proponents reject this argument, as they believe that variations in rates among different locations would be limited. According to them, the new measure guarantees the autonomy of states and municipalities, a point claimed by the critics of the proposal.

Additionally, there is a significant political cost that may discourage the implementation of a higher charge than that exercised in other parts of the country. This can be seen as an advantage or disadvantage, depending on perspective.

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Tax Changes And Their Implications

The Constitutional Amendment Project (PEC) approved in the Chamber of Deputies proposes unifying five consumption taxes into two new ones, IBS and CBS (Contribution on Goods and Services) at the federal level. The transition would begin in 2026, with complete migration expected by 2033.

After the enactment of the PEC, a resolution from the Federal Senate will determine the reference rate of the tax for each federative sphere. The local legislative power must approve a specific law that will define the level of charge in its territory, even if this implies a different rate from other locations.

Experts argue that federative autonomy, a principle enshrined in the Constitution, will be safeguarded by this measure. Currently, this freedom already exists: each state or municipality defines the rate to be charged from taxpayers.

Clarifications And Questions About The Tax Reform

According to the PEC, the charge defined by each entity will be the same for all transactions involving goods or services, except for specific or favored regimes. Even if an entity wishes to adopt a higher or lower rate, it will be unique for all goods and services covered by the IBS.

Critics such as economist Felipe Salto warn that varied needs may act as an impetus to pressure those who will subsidize the Senate with calculations for the reference rate. Salto suggests setting a band, with minimum and maximum rates for the new taxes, in the complementary law that will regulate the Reform.

In general, the Tax Reform paves the way for the fiscal autonomy of municipalities like Macaé, creating space for heated debates about the possible consequences of this new fiscal era in Brazil.