Tax increase in Belo Horizonte sparks outrage at hearing.

ALMG - The public hearing to discuss adjustments to the Property Transfer Tax (ITBI) and other taxes and fees of the Belo Horizonte City Hall (PBH) was hampered by the absence of a representative from the municipal Executive Branch itself. Requested by Deputy Fred Costa (PEN), the public hearing of the Committee on Municipal Affairs and Regionalization of the Legislative Assembly of Minas Gerais (ALMG) took place this Friday (April 24, 2015).

After lamenting the absence of a PBH (Belo Horizonte City Hall) member at the meeting, the commission's president, Fred Costa, considered this attitude and the municipality's actions to increase taxes and fees a lack of respect for the citizens of Belo Horizonte. The deputy read an official letter sent by the City Hall's Government Secretariat, which informs that the municipal Executive would be represented at the meeting by the Deputy Secretary of Revenue, Gilberto Silva Ramos, and assistants.

Fred Costa recalled the actions that led to the readjustment of municipal taxes. "In December 2013, to everyone's surprise, the City Hall initiated the process that triggered an increase in taxes and fees of all kinds for the citizens of Belo Horizonte, who already pay a very high tax burden," he complained. According to the parliamentarian, the following were increased: the solid waste collection fee (garbage tax); the ITBI (Property Transfer Tax), which went from 2,5% to 3% of the property value; and the Tax on Services of Any Nature (ISSQN), for about one hundred sectors, which increased by up to 150%.

Fred Costa said he filed several lawsuits. One was against the garbage collection fee, which he claimed was increased without the City Council receiving the proposed bill for that purpose. "Furthermore, the fee was increased far more than what would have been the correct adjustment for the period. I filed the lawsuit individually, lost in the first instance, won in the second, and it's still pending," he reported.

Regarding the ITBI (Property Transfer Tax), Fred said he filed an injunction with the Court of Justice of Minas Gerais to prevent the law from taking effect. The congressman argued that the 90-day period between the presentation of the bill and its entry into force had not been respected – the bill was presented only 40 days before the end of the year. He claimed that the so-called ninety-day period would allow for ample discussion of the matter by the citizens affected by the law.

In May 2015, the TJMG (Court of Justice of Minas Gerais) voted on the content of the matter and overturned the injunction, Fred noted. "For about 10 months, we managed to prevent citizens from paying this absurd increase, but now the City Hall says it will charge retroactively. Furthermore," the legislator reports, "the PBH (Belo Horizonte City Hall) is allegedly valuing properties at prices higher than market value."

To make matters worse, Costa points out that if a citizen files an appeal disagreeing with the value assigned to the property, the PBH (Belo Horizonte City Hall) can increase the value even further if it deems it incorrect. "In 90% of cases where a person acquires a property, they are in a hurry to pay the ITBI (Property Transfer Tax) and, therefore, even disagreeing with the value and knowing they are being wronged, they prefer not to file an appeal," he complains.

Teodomiro Dinis Camargo, vice-president of the Federation of Industries of Minas Gerais (Fiemg), criticized the Belo Horizonte City Hall (PBH), arguing that the increase in the Property Transfer Tax (ITBI) affects not only the real estate sector but the entire population. "The timing of these tax increases is the worst possible, during a time of crisis," he said. The executive believes that the increasingly high costs charged by the municipality are making it impossible for most of the population to remain in the city. "Belo Horizonte has increasingly high costs: real estate, taxes, in addition to traffic difficulties; all of this is being factored into the price of property and driving people out of the city, further and further away. Is this what we want?" he questioned.

Regarding property values, Teodomiro highlighted that appraisals in the capital have consistently been above market value. “These are overvaluations of 30%, 40%, 50%. Now, if we apply a 20% increase to the ITBI (Property Transfer Tax) and then a 40% overvaluation to the property, the citizen will face a 60% increase!” he exclaimed indignantly. He also pointed out that in other capitals, such as São Paulo (SP), the ITBI rate is 2,5%, and Belo Horizonte is rising to 3%.

Kênio de Souza Pereira, president of the Real Estate Law Council of the OAB-MG (Brazilian Bar Association of Minas Gerais), said that he questioned the City Hall regarding the percentage of acceptance of citizens' complaints about property values. According to him, the response by email from the responsible sector was that 70% of the complaints are accepted, which would demonstrate that there is an excess in the valuations.

The official also noted that the ITBI (Property Transfer Tax) has increased by 200% in the last 10 years, a percentage well above inflation, which has caused PBH (Belo Horizonte City Hall) to triple its revenue from this tax. Another piece of data that supports the overvaluation, according to Kênio, is the fact that, from 2013 to 2014, the value of ITBI revenue rose by 9%, despite property sales in the capital having fallen by 2%.

He cited the example of a commercial space, sold for R$ 290 and valued by PBH at R$ 460. “Despite this, few people take legal action against the City Hall because it is very expensive to sue the public authorities,” he lamented. Regarding the retroactive collection of ITBI (Property Transfer Tax), Kênio Pereira agreed with Fred Costa. “While the injunction was in effect, the citizen paid 2,5% on the value of the property, ceasing their obligation to the public authorities and constituting a legally perfect act. Only when the judgment is published with the overturning of the injunction can PBH start charging the 3%. Therefore, there cannot be retroactivity,” he argued.

Abelardo Ribeiro Filho, financial director of the Real Estate Brokers Union (Sindimóveis), cited another action he considered reprehensible on the part of the PBH (Belo Horizonte City Hall). With the increase in complaints about property values, the City Hall is allegedly demanding a technical report from a broker, engineer, or architect, leading citizens to abandon their claims. "What will happen is that citizens, when buying a property, will start making informal contracts," he warned, considering this practice harmful to everyone.

At the end of the meeting, deputy Fred Costa announced that he will present a request at the next meeting of the commission, this Tuesday (28). He proposes a meeting of the commission to discuss the adjustments with representatives of the City Hall, the State Public Ministry, as well as representatives of entities present at the hearing this Friday (24).