Municipalist Front has asked Deputy Arthur Lira (PP-AL) to include in a bill (which will exempt who earns up to R $ 5,000) a guarantee that the municipalities will have an extraordinary transfer to replace what they lose from revenue
The FNP (National Front of Mayors and Mayors) defended with the Deputy (PP-AL) the inclusion in its report of a guarantee of reimbursement to the municipalities for the loss of revenue that will have the increase in the exemption range of income tax. Lira is the rapporteur of what is exempt from tribute who earns up to $ 5,000 per month. The association wants the creation of a rule that obliges the Union to pass directly to the cities the amount that is lost by reducing the collection of IR retained at the source.
A Constitution provision in Articles 157 and 158 states that the entire IRPF (Individual Income Tax) retained at the source on the salaries of civil servants of cities and states should be with the coffers of mayors and governors. as the IRPF is distributed to states and municipalities.
With the exemption of the IRPF collection for those who earn up to $ 5,000 per month, these local governments will lose about $ 12.5 billion per year of revenue. States also claim compensation for decreased collection.
The FNP wants to prevent compensation for the loss of IR withheld at the source to be made via FPM (Municipal Participation Fund) because, in this case, the money would follow its own rules of the fund to be redistributed and would not necessarily compensate for the exact amount lost by each city. According to the front, such a measure could create “Federative injustices”.
FNP Executive Secretary Gilberto Perre says that the Union’s extraordinary transfer model can follow examples of what has already been done in other situations, such as the nursing floor and free public transport.
“The municipalities claim that there is a compensation of R $ 4.8 billion in the exact proportion of losses. It cannot be Kandir law. And the distribution criterion has to be seen to VIS what you are failing to raise due to the non -retaining income tax of your civil servant.”Perre said at FNP lunch with journalists. The Kandir Law was passed in 1996 and exempted exports to ICMS collection products by states and the Federal District. The law established financial compensations, but has always been criticized by governors for loss in state collection.
The mayor of João Pessoa (PB), (PP), Vice President of Relations with the National Congress of FNP, met with Lira on April 23 to discuss the bill, the expansion of the IRPF exemption range. It also creates discounts for the range of $ 5,000 to $ 7,000. According to Perre, Lira received the request with animation and said it is not fair for cities to lose with revenue.
The FNP estimates that municipalities would lose about R $ 4.8 billion per year by expanding the exemption from IR because of the reduction of tax retention paid by municipal civil servants. Cities with more than 80,000 inhabitants would be more impacted, as estimated to lose R $ 2.60 billion. Municipalities with less than 80,000 inhabitants would lose R $ 2.22 billion.
Taking into consideration the transfer of FPM by 2024 of R $ 3.25 billion to small towns, the FNP projects that these municipalities could have a gain of R $ 1.03 billion. Already the large cities, which received $ 1.60 billion from the fund last year, would have a loss of $ 1.03 billion.
“The merit of the article is right, but the problem is the one who will pay the bill. In my municipality represents $ 45 million less in the City Hall’s cashier. And everything we don’t want is a Kandir law again. […] This subject needs to be faced. This is a logic that has happened throughout Brazil that is to transfer responsibility to the municipalities without transferring appeal. […] We cannot and we will not give up an instrument that has compensation ”, Said the mayor of Porto Alegre, Sebastião Melo (MDB), vice president of FNP. According to him, the total budget of the state capital is $ 12 billion per year and has 33,000 active and inactive civil servants.
Lira said she intends to present her opinion to the Special Commission to vote him until July 16. The board was installed on May 6. The former mayor said he found it possible for the plenary to vote for the proposal until the end of the 1st semester.
The proposal was presented by the President (PT) on March 18. The project establishes to go from R $ 3,036 to R $ 5,000 the IRPF (Individual Income Tax) exemption range. If approved by Congress, the change will be valid for 2026.
At the time, the Ministry of Finance that states and municipalities would not be rewarded by the federal government for the loss of revenue they should have with the income tax exemption for those who earn up to $ 5,000 per month. Fernando Haddad’s ministry argued that while there is a drop in tax withdrawal with the source of local civil servants, federative entities will benefit from the increase in salary and consumption.
The economic team argued that more resources will be in the hands of Brazilians with the increase in exemption. Thus, states and municipalities would expand the collection with ICMS (Tax on Circulation of Goods and Services) and ISS (Service Tax) and, in the future, the IBS (Tax of Goods and Services) as people will have more money to spend.
The FNP contested the economic team’s argument and said at the time that even if the federal revenue of IR remains neutral between the exemption and encumbrance measures provided for in the proposal sent to Congress, municipalities would be harmed by reducing the retention of the IR of municipal servants.
The front calculations considered the text of the government proposal, the structure of the functionalism of each municipality (number of servers and wage range) and the existence or not of payments for inactive.
The government plans to compensate for part of the total loss, including the impact on the Union, with the increase in taxation on high salaries (starting at R $ 50,000 per month) and dividends, which would raise the volume of collection for funds. The previous government of Jair Bolsonaro (PL) tried to tax dividends, but the then Minister of Economy at the time, Paulo Guedes, was unsuccessful in Congress and abandoned the idea.
