Government collects R$ 1,7 billion with the abolished CPMF tax.

247 – The government has not yet stopped reaping the benefits of the CPMF, even four years after it was abolished. Theoretically, the tax on financial transactions ceased to be collected in January 2008. But since then, remnants of its contribution have helped to bolster the treasury by R$ 1,750 billion. This revenue would be related to administrative and judicial actions. According to tax officials, the amounts being collected include not only the tax due and unpaid at the time, but also accrued interest and penalties.

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More than four years after the National Congress decided to end the CPMF — the infamous check tax — the government continues to bolster its coffers with this tax. Data from the Federal Revenue Service shows that, since January 2008, when the contribution ceased to be collected, federal revenue has relied almost every month on resources from the CPMF, levied on companies or individuals. In this way, the economic team has already managed to reinforce the Treasury's coffers with no less than R$ 1,750 billion between January 2008 and February 2012.

This amount is sufficient, for example, for the government to cover one year of payroll tax relief for sectors that have already benefited from the measure (clothing, footwear, software, and call centers), whose estimated cost is R$ 1,5 billion per year. The residual revenue from the CPMF is equivalent, in another example, to what the government will stop collecting with the reduction of the Tax on Financial Operations (IOF) from 3% to 2,5% for credit to individuals, whose annual cost was estimated at R$ 1,6 billion.

According to tax officials, the collection of this residual CPMF (Provisional Contribution on Financial Transactions) revenue is due to administrative and judicial actions that have been concluded over the last five years. The amounts being collected include not only the tax due and unpaid at the time, but also accrued interest and penalties.

According to public finance expert Raul Velloso, this behavior demonstrates the excessive size and scale of the bureaucracy that still exists in the country:

— Legal disputes in Brazil are lengthy and cause these distortions. This is called Brazilian slowness.

Of the total collected between 2008 and 2012, R$ 408 million, for example, resulted from fines and accumulated interest on the non-payment of the CPMF (Provisional Contribution on Financial Transactions). Another R$ 97 million came from taxpayers who joined special tax installment plans and are paying off their debt in stages. In addition, R$ 38 million came from amounts that were already registered as outstanding debt to the Federal Government.

The abolished tax remains in effect for 5 years.

According to the tax authorities, the complete elimination of a tax usually takes, on average, five years. This means that the residual collection of the CPMF (Provisional Contribution on Financial Transactions) tends to become increasingly smaller and disappear from the list of collected contributions soon. But this will not happen in 2012. To give an idea of ​​the pace of this collection, last January, R$ 8 million from the defunct CPMF entered the government coffers.

Economist Felipe Salto, from the consulting firm Tendências, points out that, even with the end of the contribution — created with the argument that it would finance Public Health — the government had no problem balancing its accounts during those five years.

When the government was in the midst of a dispute with parliamentarians to prevent the elimination of the CPMF tax—whose annual revenue was close to R$ 40 billion in 2007—the economic team argued that ending the tax would be a blow to healthcare and would also harm fiscal policy. The tax rate was 0,38%, which applied to any financial transaction.

When the CPMF (Provisional Contribution on Financial Transactions) ended, the Internal Revenue Service decided to make a series of tax adjustments to compensate for the losses. The IOF (Tax on Financial Transactions), for example, was increased for credit transactions and began to be charged on new transactions. This caused the collection of this tax to jump from R$ 7,8 billion in 2007 to R$ 20,3 billion in 2008. Meanwhile, total government revenue rose by no less than R$ 82,9 billion in 2008 and has been breaking records ever since.

"The diagnosis that the government needed the CPMF [a tax on financial transactions] to achieve a primary surplus and balance its accounts was wrong," says Salto. "The contribution was not crucial for public finances."

The same government that still profits from the CPMF tax continued paying it even after its abolition. A report by GLOBO published in July 2009 showed that, a year and a half after its elimination, the contribution continued to be incorporated into the costs of government contracts with the private sector.

In at least 20 audits conducted in 2008 and 2009, the Brazilian Federal Court of Accounts (TCU) found that companies and government agencies were passing on the tax amount to suppliers, who pocketed it as profit. In just one of the contracts audited in 2008, the TCU found an improper payment of R$ 3,38 million related to the tax by a government company.

Tax refund is considered

The TCU (Brazilian Federal Court of Accounts) ordered the removal of improperly charged amounts, which was done immediately by some companies. Others attempted to negotiate deadlines to correct the situation. At the time, the Comptroller General of the Union (CGU) reaffirmed that it is the responsibility of contract managers to review payments in case of the creation, alteration, or extinction of taxes, according to article 65 of the Bidding Law (8.666). For the CGU, the managers of the contracting bodies have sufficient legal basis to obtain the review of contracts, and should do so in all suspicious cases.

Almost five years after its abolition, the return of the tax on financial transactions is always mentioned by the federal government and governors as the easiest way to increase public resources for healthcare. At the beginning of the current administration, President Dilma Rousseff even encouraged allied governors to advocate for the return of the CPMF in Congress, but the negative reaction from politicians themselves and, especially, from public opinion inhibits the formalization of a proposal in this regard.