ICMS tax increase takes R$ 800 million from Paraná residents.
A package attempting to salvage the finances of Beto Richa's (PSDB) government has raised the ICMS tax rate on thousands of goods from 12% to 18%, reversing almost all of the tax reform implemented in 2008 by Roberto Requião's (PMDB) government. The tax increase, which took effect on Wednesday, the 1st, is expected to reduce the population's purchasing power by approximately R$ 800 million over a year and further exacerbate already high local inflation.
Paraná 247 - The increase in the Tax on the Circulation of Goods and Services (ICMS), implemented by Governor Beto Richa (PSDB) to try to save the state government's finances, will have a significant impact on the pockets of Paraná residents.
The tax increase, which went into effect on Wednesday, the 1st, and will be passed on to prices, is expected to reduce the population's purchasing power by approximately R$ 800 million in one year and put pressure on the already high local inflation.
According to a report in the Gazeta do Povo newspaper, the impact on the IPCA (Consumer Price Index) in the Metropolitan Region of Curitiba (RMC) could reach 1,45 percentage points, inflating an index that, up to February, had accumulated a 7,93% increase in one year.
The package attempting to salvage the state government's finances has raised the tax rate on thousands of goods from 12% to 18%, reversing almost all of the mini-tax reform carried out in 2008 by the Roberto Requião (PMDB) administration.
This means that the state tax burden on items such as clothing, personal hygiene products, furniture, and appliances has increased by 50%. Medicines were also on the list, but a last-minute decree by Governor Beto Richa kept the ICMS (state sales tax) at 12%.
"A 6 percentage point increase is very significant. Within the trade and distribution sectors, few segments manage to achieve a profit margin of 6%. Companies cannot absorb this tax increase," notes Carlos Tortelli, partner at Consult Consultoria Empresarial.
According to the Economic Department of the Federation of Industries of Paraná (Fiep), products with an increased tax rate of 12% to 18% will, in theory, become 7,32% more expensive. In the case of gasoline, whose ICMS (state sales tax) rose from 28% to 29%, the "theoretical effect" of the ICMS increase on the price is 1,41%.