The survey shows the estimated losses that every municipality in Santa Catarina will suffer if a bill that limits the ICMS ceiling (tax on the turnover of goods and services) levied on fuel, energy, telecommunications and transport is approved and sanctioned.

The vote on the draft restricting the use of ICMS on fuels will be put to a vote this Monday (13) – Photo: Marcelo Camargo/Agência Senado/Disclosure/ND

The data was collected by the CNM (National Confederation of Municipalities) and published by Fecam (Federation of Consortia, Associations and Municipalities of Santa Catarina).

The bill will be put to a vote at an extraordinary meeting on the floor of the Senate, scheduled for 14:00 this Monday (13).

In Santa Catarina alone, the estimated losses as a result of the PLP (Additional Legal Draft) 18/2022 this year will be about 360 million reais.

The largest loss was recorded in Joinville: a budget cut of 31 million reais is planned for this year. This is followed by Itajai with an estimated loss of 29 million reais, Blumenau with 14 million reais, Florianopolis and Chapeco with 9 million reais each.

In 2023, losses will more than double and reach 791 million reais. In 2024 it is 870 million reais. The municipalities of Santa Catarina estimate that the total cost of losses will exceed 2 billion reais in two and a half years.

Fecam, as a representative of the 295 municipalities of Santa Catarina, issued a note positioning itself against the PLP 18/2022, i.e. for the senators to vote for not reducing the ICMS.

About the bill

PLP 18/2022 defines fuel as well as energy, public transport, natural gas and communications as essential and indispensable commodities. As a result, state governments cannot charge more than 17% of ICMS.

The tax is levied on the movement of goods and on the provision of domestic and intercity transportation and communication services. This is the most important source of income for the states, which are required to transfer 25% of the fee to the municipalities.

in conversation with BUT+at the end of May, UFSC (Federal University of Santa Catarina) economics professor Guilherme Alano pointed out that ICMS is the largest source of income for the States.

“If there is such a change in the tax burden, then naturally there will be a reduction in the price of the pump. However, either the government will cut spending or cover it with taxes from other sources. If it decreases over time, it will be good, but this should increase the tax burden in other chains,” he said at the time.

See the estimated losses for each municipality in the UK: