Sanitation companies are against the change in the text of the Tax Reform that increases water and sewage tariffs by 18%
Companies in the basic sanitation sector launched a campaign against the possibility of increasing the population’s water bills, projected with the Tax Reform proposal.
The petition is an initiative of (National Association and Union of Private Concessionaires of Public Water and Sewage Services) and the (Brazilian Association of State Sanitation Companies), basic sanitation companies that bring together public and private companies in the sector.
Tax reform modifies taxation on consumption. The change in the text means that the average rate of VAT (Value Added Tax) must be 26.5%, as defined at the end of the negotiations on the base text of the reform.
The companies argue that the proposal presented so far increases the tax burden in the sanitation sector from 9.74% to 26.50%. This change, according to the entities, should lead to an 18% increase in consumer water and sewage tariffs.
Currently, the sanitation sector is exempt from ICMS (Tax on the Circulation of Goods and Services) and ISS (Service Tax) and will pay the future standard VAT rate. They fear that the increase in taxes could affect investment and services provided to the population.
“It is important to remember that more than half of the population does not have sewage coverage and around 15% of Brazilians do not have access to treated water. In this Brazil without sanitation, almost 75% of the population has an income of up to one minimum wage. In other words, if the proposed model prevails, the population will be doubly impacted: with higher tariffs and the potential delay in access to these essential services.”the entities claim.
The sector is asking Congress to equate it with health services, reducing rates, which would bring neutrality to sanitation, without significant changes to the current level of taxation, according to the companies.
“It is essential that there is equivalence between the sanitation sector and the health sector, with a 60% reduction in the new ICMS, restoring the logic of tax neutrality. This proposal would have an impact of just 0.2 percentage points on the new ICMS rate”they say.
