End of Kandir Law would cause R$47.8 bi loss to agribusiness

Posted by Marina
The agricultural sector must be removed from PEC 42, which proposes the end of the Kandir Law, under penalty of enormous economic setback for the country. Since 1996, this legislation exempts from ICMS exports of Brazilian agricultural products.

The assessment is from the Brazilian Rural Society (SRB), in response to the determination of the Minister of Economy, Paulo Guedes, and some senators to end the measure through the Proposed Amendment to the Constitution. Created in 1996, the Kandir Law exempts from excise duty on primary goods and semi-finished goods intended for export. If PEC sacrifices agribusiness, the tax will be imposed on foreign sales of corn, soybeans, coffee and animal protein, making these and other products less competitive in the international market.

PEC 42, whose rapporteur is Venetian Senator Vital do Rêgo (PSB-PB), is on the Senate agenda to be voted on this week. For the SRB, the financial problems of states will only be aggravated if senators decide to end the Kandir Law: "Farmers will be penalized for the administrative inefficiency of some federated entities," says the president of the entity, Marcelo Vieira. entity, the surcharge will affect all chains, including purchasing companies, agribusiness, exporters and the population that consumes these products. "The increase in taxation is contrary to what the Federal Government has been proposing for the sector," says Vieira.

According to a survey by the Brazilian Cooperative Organization (OCB), the end of the Kandir Law would have a negative impact of $ 47.8 billion in revenues for Brazilian agribusiness. This means an 8.1% loss in the so-called Gross Production Value (GVP) compared to the numbers achieved by the sector in 2018. The OCB study also shows the evolution of some crops compared to the years preceding the Law. Soybean exports, for example, grew by 654%, while corn exports rose by 3,776%.

For SRB, the debate over the end of the Kandir Act is first and foremost a well-structured tax reform. According to the entity, the current tax system is inefficient, outdated and out of step with the development of agribusiness. In this situation, ending exemption policies only sacrifices the sector, which accounts for 48% of our exports.

The SRB announces that it will strengthen its articulations in Congress in defense of the Kandir Law, dialoguing and claiming the support of senators to save agribusiness in PEC. In a moment of economic recovery, fiscal responsibility and balance of public accounts, it is unthinkable to transfer the burden of a financial crisis to the sector that contributes so much to the economy of the country.

For Ocesp, End of Kandir Law is Shooting

For the president of the São Paulo State Cooperative Organization (Ocesp), Edivaldo Del Grande, the end of the Kandir Law would have negative impacts on the country. “We are world champions of food production and supply thanks in large part to the Kandir Law. It has given us more competitiveness to export to countries that embed very high subsidies to keep their farmers in the field and still impose unfair barriers on our products, ”says Del Grande.

For the leader, ending the Kandir Law means exporting taxes, reducing competitiveness and hindering access to overseas markets. “We already have a very serious logistics problem, which makes the cost of exports very expensive. The end of the Kandir Law would be another major impediment. We are going to lose markets out there that take decades to conquer, ”warns Del Grande.

The representative of the cooperatives criticizes a trend of increasing taxes to the sector that has been the engine of the economy. “Agribusiness has been holding the trade balance surplus for a long time. When we export, we bring foreign exchange that warms the domestic economy, increasing the number of jobs and considerably improving the collection for governments ”, emphasizes Del Grande, adding that with the Kandir Law, the collection does not exist at the exit but is surpassed by the entry of currencies that drive the economy.