Jul. 8, 2019
By Leonardo Gottems, reporter for Agropages
According to data released during a public hearing on tax exemptions related to agrochemicals in Brazil, held in the capital, Brasília, pesticides are eligible for a 60% reduction when calculating Tax on Movement of Goods and Services (ICMS) and total exemption from the Tax on Industrialized Products (IPI). These are also other forms of direct and indirect incentives related to the use of agrochemicals.
Estimates indicate that the country granted tax exemptions related to pesticides worth at least R$2.07 billion. According to public defense lawyer Marcelo Carneiro Novaes, in 2016 alone, over R$14 billion in tax subsidies were transferred to Brazil’s agrochemical industry, equating to R$70 per person.
Out of this total figure, R$8.3 billion are in the form of tax benefits related to non-collection of taxes, such as ICMS, IPI (Tax on Industrialized Products) and import tax, while another R$6 billion are in the form of indirect tax subsidies, as the law requires agricultural defensive to be classified as income, which can be fully deducted from the taxable income of rural producers, individuals or legal entities, he added.
Novaes also highlighted further credit incentives, such as the interest rate offered by the Safra Plan, as agrochemicals account for about 17% of the total cost of Brazilian agricultural production. He also noted various financial incentives, such as amnesty, debt renegotiation and barter contracts.
"Companies finance purchases with unreasonable interest rates for medium and small producers. I estimate that if they charge a rate of 15%, agricultural producers will pay interest to companies worth around R$4.5 billion per year. That is an estimate. If industries borrowed R$30 billion, and if only three credit titles were launched, the loss of revenue would be R$1 billion. This is a conservative estimate," Novaes said.
"I am not against subsidies, but I am against exempting the most dangerous pesticides along with less toxic and less harmful ones to the environment. Unequal products deserve unequal treatment. Brazil exports billions of dollars of agricultural commodities, which require the use of 80% of all agrochemicals that pollute water and the environment and require aerial spraying. In 2017, this figure totalled US$96 billion, and only R$5,000 was collected. The share of agriculture and related services, except the food industry, is only 0.3% of total revenue," he argued.
Collecting fees related to agrochemicals is defended by some environmental and health activists. One form of categorisation could be level of toxicity, with more toxic substances requiring higher rates of taxes.