Brazilian Confederation of Agriculture warns that agriculture taxes may rise 875%

The Brazilian Confederation of Agriculture and Cattle Raising (CNA) warns that taxes on agriculture can rise 875% with the tax reform proposals (PEC 45 and PEC 110).

The Canal Rural website released the information on Wednesday (29).

According to CNA, among other negative consequences for the sector are the increase in production costs and the reduction of the producer’s profit margin.

The warnings were made by the coordinator of CNA’s Economic Nucleus, Renato Conchon, in the hearing organized by the Chamber Working Group, which brought together representatives from agriculture, government, and industry.

Conchon remembered the participation of the agro in the Brazilian scenario.

The sector accounts for almost 25% of the Gross Domestic Product (GDP), 24% of jobs, and 47.6% of exports.

“We believe that tax reform is necessary, but if the specificities of agribusiness are not considered, we will have the closing of businesses and other perverse effects,” he said.

Renato Conchon presented data that if there are no differentiated tax rates for the sector, agriculture could have a tax burden increase of 875%.

In comparison, cattle farming would have a rise of 780%.

For forest production and fishing, the increase would be 230%.

Adding the primary sectors to agriculture and cattle-raising, the increase would reach 643%.

According to Conchon, the tax collection proposed by the PECs would also cause cost increases of more than 20% and a reduction in the gross margin for producers.

The impact on the population would be an increase of almost 23% in the price of the basic food basket, and a rise of 1.1 percentage points in inflation in one year, and could rise to 1.8% in the long term.

For the CNA coordinator, a single tax rate, as foreseen in the texts of the PECs, can impact the population’s budget.

“Taxing luxury products and food at the same rate will harm the income of the Brazilian middle class”, he explained.

According to Conchon, many countries that adopt the Value Added Tax (VAT) give differentiated treatment for agricultural products and agricultural inputs, besides not charging the tax to individual rural producers, which in Brazil are 98% of the total.

“If the tax burden is not passed on to the consumer, it can fall on the rural producer, depending on the type of product and the income range of the population,” he said.

For this reason, CNA defends, besides the differentiated treatment for the agro, the maintenance of the sectorial and global tax burden and the non-mandatory collection of the Tax on Goods and Services (IBS).

Other proposals defended by the Confederation are the non-incidence of selective tax on food or inputs, keeping the basic food basket tax-free, more clarity for the reimbursement of accumulated credits, adequate tax treatment for cooperatives, and differentiated taxation between biofuels and fossil fuel.

With information from Revista Oeste