The substitutive project of the tax reform presented in the Chamber of Deputies may increase taxes on foods that form the basic basket of the Brazilian population, according to experts heard by Agência Brasil. On the other hand, the coordinator of the reform working group in the Chamber, federal deputy Reginaldo Lopes (PT-MG), says that the issue is still under debate and that parliament should not allow an increase in the tax on basic foodstuffs for the poorest . Former National Secretary of Food and Nutritional Security from 2013 to 2016 and member of the Zero Hunger Institute, Arnoldo Anacleto, evaluated as “scandalous” the passage about food in the substitute for the Proposed Amendment to the Constitution (PEC 45/2019) presented by the deputy Federal Aguinaldo Ribeiro (PP-PB). Anacleto recalls that one of the positive points of the current Brazilian tax system is the zero tax – both federal and state – for horticultural products (salads, vegetables, roots, tubers, fruits, milk, eggs), considered healthier. The problem, according to the specialist, is that article 8 of the preliminary opinion of the reform provides that “food intended for human consumption” may have the rates reduced by 50%. As a result, foods that are currently completely exempt would be taxed, albeit at lower rates. “We are going to increase taxes significantly on in natura and minimally processed products, which is the basis of healthy eating, which we want to encourage and which is causing inflation. We are going to make the basic food basket more expensive”, said the expert, who is now a consultant for the Food and Agriculture Organization of the United Nations (FAO). “For me it’s a scandal,” he added. Oxfam Brasil shares this concern. The entity’s Social and Economic Justice coordinator, Jefferson Nascimento, argues that, although Article 8 provides for a lower rate, it will be higher “than the one we experience today in various products in the basic basket. So that’s definitely something to worry about.” Oxfam Brasil is a non-profit organization that works to combat inequalities and poverty, being one of the 70 entities that signed the Manifesto for Healthy, Solidarity and Sustainable Tax Reform. Large food retailers also showed concern. In a note, the Associação Brasileira de Supermercados (ABRAS) opined that “since the text does not express what the reference rate of VAT (Value Added Tax) will be, charging a reduced rate may indeed burden products that are currently exempt, causing a generalized price increase in items that make up the basic food basket”. For retailers, charging a rate may burden exempt products – EBC Responsible for the federal government’s policy for the production of food for domestic consumption, the Minister of Agrarian Development and Family Agriculture, Paulo Teixeira, told Agência Brasil that he is in dialogue with the rapporteur, Aguinaldo Ribeiro , and with Deputy Reginaldo Lopes, “in the sense of not taxing healthy foods, obviously I think that ultra-processed foods should be taxed”. The minister added that if the text is really going to cause an increase in food taxation “the government must dialogue with Congress to avoid (the increase)”. The coordinator of the reform working group, Deputy Reginaldo Lopes, in an interview with Agência Brasil, considered that the theme of food in the basic food basket is still under discussion and can be changed. “We will assess. Our first commitment is not to have a tax increase and even less for the poorest people”. The parliamentarian added that the cashback mechanism, which is the return of part of the money spent on the purchase of a product, should compensate for any possible tax increase, in addition to considering that it is a more efficient way of doing tax justice compared to exemptions that exist today for food. We sought out the rapporteur for the matter, Deputy Aguinaldo Ribeiro, to comment on the topic, but the advisory team informed that he would not have time due to the agenda of meetings on tax reform. The expectation is that the theme will be voted on in the plenary of the Chamber until the second week of July. Cashback The text of the reform provides for cashback by including the forecast of “hypotheses of refunding the tax to individuals, including the limits and beneficiaries”, which should be regulated in a later law, without a defined period. Oxfam Brasil, in a note, warned that the mechanism is difficult to implement, in addition to highlighting that the time “between the establishment of VAT and the regulation of cashback can leave millions of low-income families exposed to the increase in the rate on essential products, depending on the review of the exemption of basic basket items”. The researcher at the Zero Hunger Institute, Arnoldo Anacleto, argues that a large number of Brazilian workers are in the informal market, which should make it difficult to return paid amounts. “This thing that the cashback will solve, it won’t solve it. He eats there at the bus stop. He eats the warm one that is being sold there for R$12.00, he is in the informal economy. How is he going to generate credit?” asked the expert. For the coordinator of the reform working group, Reginaldo Lopes, it is possible to make the return via cashback efficiently, which is a fairer policy from the point of view of inequality, since today both the rich and the poor receive the same exemption of food. “So you charge a (richer) part and relieve another by returning the money to the poorest, creating cashback. Our reform is to improve people’s lives, it is to provide productive efficiency. Because today our model is tax on tax,” he explained. The petista added that there are other possibilities being discussed in the Chamber, such as the revision of part of the basic basket items. “We revisit the basic basket and, instead of exempting the 1,300 products, we exempt some more important products and in the others we return in cashback”, he revealed. For the parliamentarian, the exemption is not efficient because there are no guarantees that it will reach the final price of the food. “I make a differentiated rate by sector, you know what happens? It is incorporated into the company’s profit margin,” he said. For Reginaldo Lopes, “cashback is an instrument that focuses on inequality and resolves it”.
Agência Brasil
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