The food sector even defends dog and cat food in the basic food basket without taxes

Parallel tax reform group criticizes government list and return of taxes for low income

Mar 22, 2024 at 12:17 pm
Updated: March 22, 2024 at 3:17 pm

Eduardo Cucolo

SÃO PAULO

Representatives of the food sector who participate in the parallel regulatory group of the tax reform defend broad tax relief from basic basket, without any restriction on products for nutritional reasons or consumer income criteria.

The tax refund for low-income people, the so-called “cashback“, is widely rejected by food producers and retailers. The assessment is that the system used in several Latin American countries and in other regions – and also in Rio Grande do Sul– will not work throughout Brazil.

In exemption, whether or not the benefit is passed on to the consumer depends on the private sector. In cashback, the refund is made by the government.

In a seminar held at the Chamber of Deputies this Thursday (21), in which only one non-business entity participated, there was a defense of extending the tax benefit to products ultra-processed, for higher-income consumers and even save money on pet food domestic animals domestic animals, such as dogs and cats.

Stuffed cookies and snacks are examples of ultra-processed foods – Eduardo Knapp/Folhapress

The reform approved in 2023 says that it will be up to Congress to define which foods will be in the new national basic food basket with a zero rate and which will have a 60% reduction in new taxes.

The new constitutional text allows some foods to not be exempted and others to have additional taxation, with the Selective Tax for items harmful to health.

There is still no closed proposal, but participants in the parallel group have already submitted to the Ministry of Finance the request that all foods have some exemption (100% or 60%) and that none have extra taxes for nutritional reasons. The majority of business entities that prepare an alternative project to the government's, however, want to put practically everything at zero rate.

“It is a very important step to perhaps discuss the issue of cashback in a few years, in the future, but the best solution, at the current moment for the Brazilian population, is in fact for us to think that the products, for the most part, will be in the basic basket”, said Eduardo Lourenço, legal consultant at Instituto Pensar Agro, who led the seminar.

The cashback was criticized by representatives of the dairy, poultry, pork and egg, meat and trade sectors present at the meeting. Two sectors that were not exempted in the reform, sanitation and telecommunications, requested the use of cashback as compensation.

Practically everyone present stated that the country does not have a registry capable of finding all Brazilians who would need to benefit from cashback. There was criticism of the information bases of the Bolsa Família and the federal government's Cadastro Único.

The idea of returning consumption taxes to the poorest was presented by the IDB (Inter-American Development Bank) about ten years ago and is also defended by the World Bank.

It starts from the conclusion that the system adopted by several countries over the last century — of providing tax benefits for certain products — mainly benefited the richest part of the population and companies in the sector, and not the poorest.

For this reason, many economies now opt for personalized taxation mechanisms: the tax depends on who consumes and not on the product – in addition to being paid by the government itself.

During the meeting there was also criticism of the initiative of the Ministry of Development and Social Assistance, responsible for Bolsa Família, to anticipate the regulation of tax reform and publish a list of products that can make up the basic food basket, using criteria that consider the diet to be healthy and nutritionally adequate.

Rafaela Vieira, from Pacto Contra a Fome, was the only dissonant voice and praised the government's initiative.

“The Pact against Hunger advocates that the national basic food basket has fresh and minimally processed foods in its composition and that these are the only items with full tax exemption.”

Quoting recommendation from several international organizations, such as the FAO and the UN itself, Vieira listed the only items that should be exempt (fruits, vegetables, roots and tubers, whole grains, legumes, oilseeds, poultry, fresh fish and eggs).

Anderson Trautmann Cardoso, from the Confederation of Commercial Business Associations of Brazil, said he had spoken with government representatives who deal with the regulation of the reform.

According to him, the possibility of charging the Selective Tax on any food is ruled out, as long as it is at least partially exempt.

“It was signaled that this is a proposal that will come from the government itself”, he stated. “Those foods that are included in the 60% reduction cannot, according to the constitutional text, have the application of the Selective Tax and it is reasonable that we also have the same rule for the basic food basket.”

Trautmann defended bringing forward the exemption of the new basket in the regulations to 2025, instead of waiting for the transition between 2027 and 2032.

Another point discussed was the issue of animal nutrition. The reform placed in the Constitution a 60% exemption only for food for human consumption, but did not make the same restriction in relation to basic food basket items. Based on this point, the representative of the Brazilian Association of the Pet Products Industry defended an even broader benefit.

“It’s time for us to correct this tax injustice, leveling pet food with human food”, said Cláudia Horta.

“It is also part of the budget of the Brazilian family that has a pet.”

https://www1.folha.uol.com.br/mercado/2024/03/setor-de-alimentos-defende-ultraprocessado-e-ate-racao-animal-na-cesta-basica-desonerada.shtml