Anuário Brasileiro do Arroz 2011 - Unemat

42
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Tax exemption gets onto the rice agenda, seeing
that taxation impairs domestic sales of the cereal
The fiscal war between Brazilian States
is one of the factors that make our national
rice more expensive than imported
rice in the domestic market. As upwards of
73% of the cereal is produced in the two
southernmost states of Brazil, excessive
taxation weakens the competitive edge of
the southern product, particularly, if compared
to rice from Argentina and Uruguay.
In 2010, the production chain in Rio
Grande do Sul started to exert pressure,
in a very orderly manner, asking for tax
exemption to the cereal. But, if for one
thing, this technically translates into lower
prices at consumer level and lower
production costs, on the other hand, it
would affect national tax collection interests
and the interests of the major rice
producing States. There lies the big hurdle
of the proposal, reason for countless debates
and dissentions among States, production
chain and even federal government
interests. As nobody wants to forgo the
collection of taxes, this impasse is leaving
no chance for a definite solution, which
could come from the Fiscal Reform Bill,
now being debated in Congress, but entry
into force has not been scheduled yet.
“The demand for tax reductions has
come a long way, and so have the debates.
But it affects the coffers of State and
Federal governments, none of them willing
to give up tax revenues, and no solution is
in sight. With the commercialization crisis,
the issue surfaced in earnest. This time we
expect for results”, stated André Barretto,
president of the Brazilian Rice Industries’
Association (Abiarroz) and of the Federation
of Rice Cooperatives in Rio Grande do
Sul (Fearroz).
According to him, the issue is being
debated both in the national and state
sectorial chambers. There are bills waiting
to be voted into law at the State Legislative
Assembly and in Congress. “In a
Fiscal Reform, the question of the ICMS
(state value added tax) is a core issue in
the debates. It has to be addressed. The
problem is to find politicians willing to
carry on with a reform of such relevance,
since there are conflicting interests”, he
stresses. He recalls that the most penalized
state by the tax burden is exactly the
biggest producer of the cereal. “As in most
other states the crop is not very relevant
in terms of GDP (Gross Domestic Product),
the governments levy lower taxes on the
product, especially lower ICMS taxes”, Barretto
ponders.
OPPOSITE DIRECTION The tax
situation in Brazil is so discrepant that
the price of rice shipped from Rio Grande
do Sul to other states is on a par with
the price of rice from other countries, on
which the Common External Tariff (CET)
is levied - a kind of tariff barrier on products
that come from abroad. In the case
of Rio Grande do Sul, the barrier goes by
the names of ICMS, Social Integration
Program fees and Contribution for the Financing
of Social Security (PIS/Cofins),
Rural Workers’ Assistant Fund (Funrural),
Rio Grande do Sul Rice Farming Defense
and Cooperation Fee RS (CDO), Additional
Fee for the Renewal of the Mercantile
Marine (AFRMM) and others.
The “Price Markup”, for taxation purposes,
may exceed 10%, according to studies,
just on processed rice – within the
farm gate it would represent upwards of
15% of the production cost. “At present,
Rio Grande do Sul faces more difficulties
selling to other States than the Mercosur
countries and gets on a par, to its disadvantage
in many cases, with the United
States, Vietnam and Thailand”, says Tiago
Sarmento Barata, analyst with Agrotendências
Consultoria em Agronegócios.
According to the analyst, processed rice
from Rio Grande do Sul may reach the town
of Recife (PE) with a per-ton price US$ 100
higher compared to the similar product
from Montevideo (Uruguay). In Barata’s
view, Rio Grande do Sul levies ICMS taxes
from 7% to 12% on processed rice that is
Robispierre Giuliani
shipped to other states, and could overcome
the prejudice of tax renouncement. “It
would mean one step backward and then
two steps forward”, he ponders.
With well structured planning, in the
opinion of the analyst, the State could
even expand its tax collection revenues by
reducing the tax impact on rice, by virtue
of higher processing volumes and soaring
industrial transactions by the industries
of Rio Grande do Sul. He mentions that,
after generating an average of 420 new
jobs a year, in 2010 the industry of the
sector generated only one. “A reduction
to the tax burden represents more processing,
jobs and income. And in the least
developed region in Rio Grande do Sul,
where the economy is much dependant
on rice. A crisis like this one affects all
the segments, as a whole, throughout
the State”, he explains.
FOCUSED Study ordered by the Rio
Grande do Sul Rice Institute (Irga) from
the Institute for the Study of Trade and
International Negotiations (Icone) showed
that, in 2010, 9.89% tax was levied
on a 30-kg bale of white rice, traded for
R$ 37.38. This percentage is the sum of
the federal (2.19%), state (7.57%) and
municipal (0.13%) taxes, representing
R$ 3.70 in the composition of the final
value of industry net sales.
The ICMS, state value added value,
represents the biggest share, accounting
for 7.48% or R$ 2.80 over the industry
sales price to the domestic market.
In case of shipments abroad, taxation
is not that heavy, but still eligible for
the exemption of some taxes. The chief
executive officer at the Icone institute,
André Nassar, mentions that the study
is being detailed in conjunction with the
production chain. Anyway, leaving out
the ICMS, only a few taxes remain to be
removed and their share might not be
as relevant in light of the commitment
brought about by the state tax.