Senators ask for exemption of nuts, açaí, tamale and cod in the basic basket of tax reform

Senators ask for exemption of nuts, açaí, tamale and cod in the basic basket of tax reform

Suggestions from parliamentarians would double the list of tax-free foods, from 26 to at least 52 items

Vinícius Barboza
São Paulo

The senators discussing the tax reform regulation have already filed at least 14 amendments that call for inclusion of new foods in the tax-free basic basket.

Among the most recent requests is an amendment by senator Flávio Bolsonaro (PL-RJ) sent last Wednesday (6) asking for the exemption of items such as açaí, pamonha, curau, molasses, rapadura, brown sugar, dulce de leche, vinegar and even mineral water.

Other amendments request that products such as cod, cottonseed oil, juices without added sugar and preservatives, fungi, nuts, mate, hypoproteic foods (with a low protein content) and honey be 100% exempt.

If approved, the amendments that call for the inclusion of items in the basic basket would make the list double in size, jumping from 26 to at least 52 products.

Among the 1,642 amendments to tax reform proposed in the Senate, at least 16 specifically deal with the national basic food basket. Two try to prevent the list of foods that make up the basket from being evaluated from time to time.

The senators argue that the exemption of these additional items would be important due to the nutritional value of the food and the regional and cultural importance of the products — such as açaí, typical in the North of Brazil, and cod, consumed in Christian festivities.

Designed as a measure favorable to the most vulnerable classes, some of the amendments would make the basic food basket less focused on items considered essential. Products such as cashew nuts and cod, for example, today cost more than R$100/kg in some supermarket chains.

The tax reform is under analysis by the Senate's CCJ (Constitution and Justice Commission). This week alone, at least four public hearings will be held.

The amendments are analyzed by the project's rapporteur in the House, senator Eduardo Braga (MDB-AM). The president of the Senate, Rodrigo Pacheco (PSD-MG), estimates that the project will be voted on on December 4th.

Understand the basic basket proposed by tax reform

The basic basket of tax reform will make your products 100% exempt from IBS (Goods and Services Tax) and CBS (Contribution on Goods and Services).

The list approved by the Chamber of Deputies in July provides for the exemption of 26 categories, including meat, included in the last minute project:

1. Rice
2. Pasteurized or industrialized fluid milk, in the form of ultra-pasteurized, powdered, whole, semi-skimmed or skimmed milk; and infant formulas defined by specific legal provision
3. Butter
4. Margarine
5. Beans
6. Roots and tubers
7. Coconuts
8. Coffee
9. Soybean oil and babassu oils
10. Cassava flour
11. Corn flour, groats and groats; and crushed grains or cornflakes
12. Wheat flour
13. Sugar
14. Pasta
15. Ordinary bread (containing only cereal flour, yeast, water and salt)
16. Corn oils
17. Oats
18. Flours
19. Beef, pork, lamb, goat and poultry meat and products of animal origin (except foie gras)
20. Fish and fish meat (except salmonids, tuna, cod, haddock, saithe and roe and other by-products)
21. Cheeses
22. Salt
23. Eggs*
24. Vegetables (except mushrooms and truffles)*
25. Fresh or chilled fruit and frozen fruit without added sugar or other sweeteners*
26. Plants and floriculture products related to horticulture and cultivated for food, ornamental or medicinal purposes*

*Items that are not in the basic basket of 22 items, but which would also have 100% tax exemption

A second list proposes that another 12 categories of products be subject to tax, but at rates 60% lower.

Tax exemption for the basic food basket may not reach the end consumer, say tax experts

Although the basic basket was created under the argument of favoring the poorest, the tax exemption may not reach the final consumer and the most vulnerable, and may even increase the general VAT (Value Added Tax) rate.

"The price of food for consumers has several factors. Of course, taxation is relevant, but costs with inflation, transport and production are more impactful", says Eduardo Lourenço, from Maneira Advogados.

“The effects of this exemption may be limited, or even counterproductive, due to the way in which tax benefits are distributed throughout the production and commercial chain”, says Rafael Ujvari, specialist in tax law at Briganti Advogados.

"The tax benefit often does not reach the end consumer directly. Instead of passing on the discounts to the sales price, intermediaries such as producers, distributors and retailers often absorb the benefits, keeping prices high and taking advantage of the exemption to increase their profit margins", he states.

Ujvari understands that other solutions must be thought of by parliamentarians in order to reduce the costs passed on to the poorest classes. Furthermore, it warns that the exemption proposed by the basic food basket could compromise the cash flow of states and municipalities, depending on the size of the tax waiver.

Chicken, milk, coffee and oil became more expensive in capitals in October

Chicken, powdered and pasteurized milk, coffee powder and grains and soybean oil became more expensive in eight Brazilian capitals in October compared to the previous month, according to the Cesta de Consumo platform, research by FGV Ibre and Neogrid.

The monthly survey monitors the prices of up to 50 products in the cities of São Paulo, Rio de Janeiro, Belo Horizonte, Brasília, Curitiba, Salvador, Fortaleza and Manaus. The results include 19 of the 26 items included in the basket approved by deputies in July.

Other items that increased in price in the same period in the eight capitals of the study were butter, margarine, wheat flour and frozen potatoes — the last being the only one not to be included in the list under analysis in the Senate.

Oil had the biggest increase in Rio, with its price rising 3.3% on the same basis of comparison. The capital of Rio, in fact, has the most expensive basic food basket among the cities surveyed — R$ 1,009.11, the only one above R$ 1,000.

Cassava flour, another product in the tax's basic basket, rose 5.3% in Rio, and pork, 5.6% in Manaus. Items such as rice, pasta and cheese increased in 7 of the 8 cities in the survey.

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