Anuário Brasileiro do Arroz 2011 - Unemat

46
It’s fiscal war!
The variable tax burden makes the national product more
expensive, while some measures make imported rice cheaper
One of the examples most cited by
the rice production chain in Rio Grande
do Sul that shows the taxation discrepancies
and the need for an exemption
from the State Value-Added Tax (ICMS)
is the State of Minas Gerais, where no
taxes whatsoever are levied on rice. As
things are in the South, it is always
cheaper to import the cereal from the
Mercosur countries, through the ports
of Vitória (ES) or Santos (SP), than purchasing
it from the South, with 12-percent
ICMS tax levied on it at the origin.
The difference lies in the fact that in
Minas Gerais the volume of rice produced
is 100 times smaller than in Rio
Grande do Sul and, therefore, no significant
volume of taxes is at stake. For
the State of Espírito Santo, for example,
the incidence of the ICMS of rice
from Rio Grande do Sul is 7%.
Among the income sources of Rio
Grande do Sul, ICMS levied on rice is a
major one, while Minas Gerais imports
the cereal for its supply needs. For the
wholesalers and retailers in that state,
things get easier for them to supply
their internal markets and neighboring
regions. “There are States, like Goiás,
where internal ICMS is zero, there
is exemption for rice in the husk and
there is a 130-percent tax incidence
on processed rice, says André Barretto,
president of the Brazilian Rice Industries’
Association (Abiarroz) and of the
Federation of Rice Cooperatives in Rio
Grande do Sul (Fearroz).
The situation is bound to get even
worse for Rio Grande do Sul: the State
of São Paulo has just announced zero
ICMS taxes on rice, while Santa Catarina
has decided to reduce to 3% its
ICMS taxes on processed rice sold to
other States. This is going to result
into even tighter competition in the
domestic market. Furthermore, Rio
Grande do Sul also bears the burden
of higher transportation costs, besides
fees, contributions and other costs,
making its prices ever more expensive
compared to the competition coming
from abroad. In attempt to find a way
around the problem, the state government
has enacted the presumed credit
mechanism, by which 3.5-percent is
deducted from the ICMS tax. “With all
the unfoldings involved and bureaucratic
work, it means very little”, explains
Barreto. But it is by no means an ideal
situation.
The challenge of the big commercial
producers in Brazil, according to Alexandre
Selk, broker with Risoy Corretora,
in Pelotas (RS), consists in exporting,
whether abroad or to other states
in Brazil, 8.5 million of the 8.8 million
tons now being harvested. Not to mention
the carryover stocks, which exceed
2 million tons. “This is a task that relies
heavily on government support and on
a change to the tax burden”, the broker
acknowledges.
HOPE The rice production chain
in Rio Grande do Sul is acting on two
fronts for tax exemption purposes: one
consists in negotiating directly with
members of the legislative assembly
and state and federal governments and
the other, through the sectorial chambers.
“These are our only chances while
the Tax Reform Bill is awaiting approval
by Congress”, explains Barretto, president
of Abiarroz and Fearroz. According
to Barretto, while the deputies of the
rural coalition are getting to grips with
the activities of the production chain
and so are other deputies committed
to tax exemption measures, some practical
measures are now in force.
In 2011, the Rio Grande do Sul State
Assembly is debating the exemption
from the Cooperation and Rice Defense
Fee (CDO) levied on exports. The
percentage value represents R$ 0.36
per 50-kg sack of rice in the husk (or
a 30-kg bale of processed rice). The
measure relies on the support from the
state government, said the president
of the Rio Grande do Sul Rice Institute
(Irga), Cláudio Brayer Pereira. “As
the CDO is levied on rice imports, its
removal from exports is a manner to
stimulate and compensate for foreign
sales.”, he mentions. However, there
are other costs in the export process,
among them the Additional Freight Fee
for the Renewal of the Merchant Marine
Fleet (AFRMM).
The production chain suggests the
elimination of the fees for the Social
Integration Program (PIS), the Contribution
to Social Security Financing (Cofins)
and the Rural Workers’ Assistance
Fund (Funrural), besides the AFRMM,
among others, which are still levied on
some segments and operations of the
sector. For now, only a few companies
– none of the rice sector – were granted,
by court ruling, an exemption from
paying the Funrural fee.
In Rio Grande do Sul, the resumption
of the activities of the Rice Sectorial
Chamber, which had been deactivated
by the sate government five
years ago, gave rise to a thematic
group responsible for coming up with
alternatives and exemption from taxes
levied on the sector. At the Rice Sectorial
Chamber of the Nationwide Rice
Production Chain, the issue is listed on
the strategic agenda and lots of claims
on the subject are being debated. “We
hope the government will take them
into consideration”, Barreto ponders.