By a vote of 7 to 4, the Supreme Federal Court (STF) removed any restrictions on ICMS benefits granted by the state of Minas Gerais to food products. The majority of the ministers ruled in favor of the lawsuit filed by the Solidariedade (SD) party questioning provisions of a decree that granted presumed credits and reductions in the ICMS tax base on internal exports of products such as meat and milk only to residents of the state.
The understanding of the rapporteur, Justice Luiz Fux, prevailed. The judge considered that, by distinguishing between federated entities and taxpayers, the state of Minas Gerais violated article 152 of the Constitution. According to the provision, “States, the Federal District and Municipalities are prohibited from establishing tax differences between goods and services, of any nature, based on their origin or destination”. Furthermore, Fux noted that the consequence of the tax benefits in question is the reduction in the price of basic food baskets, which could not be limited to a group of taxpayers, since there can be no restrictions on the fundamental right to food.
Thus, the rapporteur granted the SD's request to declare the unconstitutionality of sections of Decree 43.080/2002 that deal with ICMS benefits. The minister ordered the suppression of the expressions “produced in the State” and “provided they are produced in the State”. In addition, he determined that other provisions of the decree be given “interpretation in accordance with the Constitution”, that is, without restrictions on application according to the origin of the goods.
On the other hand, a divergent understanding by Justice Edson Fachin was defeated, who considered the ICMS benefits unconstitutional in their entirety. For Fachin, the analysis of the unconstitutionality of provisions of the state decree cannot be limited to the restriction on products from Minas Gerais, as this would represent the mere extension of tax benefits to other states, without taking into account the resulting budgetary impacts.
Furthermore, for the judge, the provisions are unconstitutional because they represent an abuse of economic power by local companies against their competitors in other states, violating the principle of free competition set out in article 170, IV, of the Constitution.
The rapporteur's vote was supported by ministers Alexandre de Moraes, Dias Toffoli, André Mendonça, Cármen Lúcia, Roberto Barroso and Cristiano Zanin. Fachin's dissent was followed by ministers Rosa Weber, Nunes Marques and Gilmar Mendes.
The discussion took place in Direct Action of Unconstitutionality (ADI) 5,363.