Below are the main points defended by Everardo Maciel.
Initial step
A reform of the current tax system must begin with a comprehensive diagnosis that identifies the problems. This must be done by a committee of experts, in a transparent manner, “in broad daylight”, with clear calculations. From there, solutions must be debated, which must take into account the political and cultural reality of the country.
Legal uncertainty
This is the major problem with the current system. To combat it, it is necessary to bring together disparate legislation and define concepts. The idea, he says, is to prevent tax litigation, which at the federal level, by the end of 2018, had already reached R$1.5 trillion. In this sense, it is necessary to integrate the administrative process with the judicial process, create a Tax Procedure Code and consolidate the National Tax Code. “Taxpayers take almost 20 years to settle lawsuits, generating tax disruption and inequalities. We spent 50 years discussing what revenue is. It is ridiculous.”
ICMS on fuels
Based on the principle of selectivity based on the essentiality established by the Constitution for the ICMS, it makes no sense to imagine that the tax rate for fuels and lubricants would be higher than the modal rate. “Or we will come to the conclusion that lubricants and fuels are superfluous products.” The recent reduction of ICMS on fuels, electricity and telecommunications is correct. There is no reason to talk about offsetting losses. There will not necessarily be a drop in revenue. The tax is not just a tax rate, but a tax rate with a calculation basis. Revenue may increase based on the calculation basis. “I am not sure that the current calculation bases are inflated. If the governors try to review the ICMS reduction, they will be committing a flagrant unconstitutionality.”
ICMS Reform
One of the problems with ICMS and ISS is enforcing what the Constitution determines. For example, tax incentives. “It is prohibited to do this, but there is no sanction. There must be sanctions for the federative entity, the public agent and the beneficiary. Tax incentives must be given in a parsimonious and specific manner.” ICMS has more than 40 tax rates and lacks regulatory stability. A national standardizing law could reduce the number of tax rates and eliminate special regimes. There is no need to change the current taxation model or import models from elsewhere. The difficulty with ICMS credits can also be resolved. “The legislation already requires the credit to be returned, but the problem is that this is not being complied with. There must be punishments for states that do not comply. The punishment could follow what already exists in the Fiscal Responsibility Law, such as the suspension of transfers.”
Parliamentary amendments
It is necessary to create new criteria for dividing the revenue, which includes mandatory transfers, such as the State Participation Fund and the Municipal Participation Fund. And also create rules for other transfers. “Today the most powerful are voluntary, the parliamentary amendments.”
CPMF
The national tax system needs to be adjusted to address major contemporary issues, such as climate change and the technological revolution. Social security financing needs to be rethought. Payroll-based financing has no future with the replacement of human labor by machines and the aging of the population. “It is not unreasonable to consider some form of taxation of financial transactions. It would certainly be different from the old CPMF because today there are transactions that we did not have back then, such as those involving cryptocurrencies.”
Dividends
The idea defended by the Minister of Economy, Paulo Guedes, of taxing dividends above R$500,000 is “completely nonsensical” because this profit has already been taxed in the company. It also makes no sense to reduce the tax burden on profits in the company and create an income tax on dividends. This is a technical issue, related to the moment of taxation, and has nothing to do with tax justice. “There was a choice to tax profits only in the company, which is the current model, because taxation on distribution leaves considerable room for disguised distribution of profits.” When this was done, IRPJ revenues increased. From 1996 to 2002, he says, the increase was R$1,171,000.
PIS and Cofins
The unification of PIS and Cofins makes no sense because they are two identical contributions. The differences are specific. It is a false merger. What differs is the destination of each one. The PIS revenue goes to salary bonuses and BNDES financing. Cofins goes to social security. “Unless the person wants to end the salary bonus and does not want to say so. They may be avoiding discussing this and trying to do it another way.” PIS and Cofins have two regimes: cumulative, which is not subject to litigation, and non-cumulative, in which litigation is concentrated on the discussion of the concept of input. “There are problems that need to be resolved, of course.” Regulation by normative instruction that follows the case law of the Superior Court of Justice on inputs would help with this. The various special PIS and Cofins regimes, “which are not appropriate,” also need to be reviewed, but there is no need to change the current taxation models for the two contributions.