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Taxation could be 21,7% if all goods and services had the same rate. This study shows distortions in revenue.
A National Confederation of Industry (CNI) states that tax reform is essential to simplify the tax collection system and make it more efficient. According to the entity, the joint standard rate of the new taxes, the Tax on Goods and Services (IBS) and the Social Contribution on Goods and Services (CBS), should be 27,5%. With the tax reform, five taxes on consumption, PIS/Cofins, IPI, ICMS and ISS, will be replaced by the IBS, which is the responsibility of states and municipalities, and the CBS and the Selective Tax, of Union competence.
The fiscal review and tax restructuring proposed by the tax reform aim to simplify and modernize the tax collection system. The change in taxes is seen as a measure that will bring more transparency and competitiveness to companies, in addition to facilitating compliance with tax obligations. Tax reform is urgent given the need to promote significant changes in the Brazilian tax system.
Impacts of tax reform
The Constitutional Amendment Proposal (PEC) 45/2019 establishes that new taxes must maintain the same collection of current taxes, in proportion to the Gross Domestic Product (GDP), so that there is no increase in the tax burden.
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Studies carried out by the National Confederation of Industry (CNI) and LCA Consultores reveal that, if a uniform rate were adopted for all goods and services, without exceptions or special regimes, the standard rate would be 21,7%. However, due to the increase in the number of exceptions to the general rules on Goods and Services Tax (IBS) and Contribution on Goods and Services (CBS), the rate rose to 27,5%.
Social Contribution and Selective Tax: fundamental points of tax reform
According to Armando Monteiro Neto, president of the CNI Tax and Fiscal Affairs Council, the new tax model, with IBS and CBS, aims to eliminate several distortions, simplify and bring more transparency to consumption taxation.
'The tax reform will eliminate cumulativity and guarantee the quick refund of tax credits that companies receive. Finally we will have a system that exempts exports and investments, increasing competitiveness of companies, with reflexes positive effects on economic growth', explains Monteiro Neto.
Tax restructuring: joint IBS and CBS rate
The standard IBS/CBS rate was calculated to reproduce the collection of PIS/Cofins, IPI, ICMS and ISS, totaling R$916 billion in 2020, corresponding to 12,04% of that year's GDP. After estimating the potential incidence base of IBS and CBS based on household and government consumption, published in the 2020 National Accounts (IBGE), it was found that the standard rate would be 21,7%.
However, some exceptions to the standard treatment, such as Simples Nacional, the specific regime for the financial sector and the tax treatment given to public purchases, together with the collection of the Selective Tax levied on cigarettes, alcoholic beverages and extractive activities, increase the standard rate. from IBS/CBS to 27,5%.
Challenges and consequences of tax reform
The imposition of reduced rates or specific regimes for some goods and services results in a higher standard rate for others. As a result, the approval of exceptions provided for in PEC 45/2019 approved by the Senate resulted in an increase of 5,8 percentage points in the standard IBS/CBS rate, which jumped from 21,7% to 27,5%.
Source: Industry Portal
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