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End of tax rebate may raise Brazilian agri-input prices by 7.6%
Mar. 13, 2019
By Leonardo Gottems, reporter for AgroPages
 |
 Luiz Suzigan Director of Economy of LCA Consultoria |
The ICMS Agreement No. 100/1997, a covenant that reduces by 60% the Tax on the Circulation of Goods and Services (ICMS) in the operations of agricultural inputs and products will ends on April 30, 2019. With the end of this tax rebate, agri-input prices are expected to rise by 7.6% in Brazil.
The impact of the end of the ICMS Agreement is a subject of great concern among rural producers in the South American country. As a result, the Confederation of Agriculture and Livestock of Brazil (CNA) is defending the extension of the discount on taxes on agrochemicals, fertilizers and other inputs.
The organization has mobilized its Economic Working Group to warn of economic losses and to pressure government officials to maintain the discount on taxes. This ICMS Agreement was extended in 2017 by Brazilian federal government, due to a request from the same CNA.
"Preliminary estimates point to an increase of up to 7.6% in input prices, depending on the state. The non-extension will affect the profitability of producers and, consequently, the sustainable growth of the state economy," said the coordinator of CNA's Economic Nucleus, Renato Conchon.
The president of the Federation of Agriculture and Livestock of the State of Santa Catarina (FAESC), José Zeferino Pedrozo, said that the sector needs to unite to defend Brazilian agricultural production. "We can not afford that bill. So we need the CNA and its strength to give the necessary support to the federations."
"The return of the collection of taxes can have serious consequences for the Brazilian economy, such as trade deficits, inflation and currency speculation," added Renato Conchon. Another point discussed at the meeting was the economic and political scenario for 2019. According to the director of Economy of LCA Consultoria, Luiz Suzigan, the international economy shows signs of concern.
"The trade dispute between the United States and China may bring favorable effects to Brazil in the short term, but a protectionist escalation would have a negative net effect in the medium term." For the domestic scenario, Conchon said that Pension Reform will be the great test to consolidate improved market confidence.
Source: AgroNews
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