SP ends with exemption from VAT of meat

The meat sold at retail in the State of São Paulo, the country''s main consumer market, should be more guys from April 1. At the end of last year, the Governor of São Paulo, Geraldo Alckmin, edited Decree extinguishing the exemption of ICMS that benefited the segment of meat since 2009. The measure, part of a review of tax incentives granted by the São Paulo State Government, may result in an elevation of up to 8% in the prices of meat depending on the margin of the retailers, according to the calculation of the Tax Agents '' Union Vice President of the State of São Paulo (Sinafresp), Glauco Honorius.
Published on December 30 Edition of the "Official Gazette of the State of São Paulo", the Decree 62,401 established in 11% the GST of meat (beef, pork, chicken, among others) in sales to the final consumer. For refrigerators, the tax will be 7%, a level that lookout until 2009. "Certainly, the motivation is arrecadatória," said tax attorney Mark Pagliaro, Office F Pagliaro Lawyers. Amid the crisis, the collection of GST from Estadão de Sao Paulo fell 0.3% in nominal terms between January and November and 8.6% in real terms.
The Secretariat of Finance reported that the purpose of the exemption is based on studies which "indicated the need to modulate the tax exemption with focus on maintaining jobs, stimulating economic activity and fundraising support. The process of review of the benefits, the Secretariat added, is the "grave economic crisis" in the country. According to the Farm, the ICMS review of meat effect "neutral" for the productive chain. "Setting a reduced tax remains among the lowest prices in the country, and is neutral in relation to the production chain, to preserve jobs in the industry," informed the Secretariat, in a note.
In fact, the refrigerators will not be affected by the measure, said Glaucus Honorius, of Sinafresp. According to him, the decree that abolished the exemption from ICMS for meat also established credit granted the same 7%. In practice, the industries will not pay the tax, he added Mark Pagliaro. On the other hand, the retail-and, consequently, consumers, will not be immune. "The price adjustment is in supermarkets because of the difference in tax rates," Pagliaro said.
As the tax rate is 11% supermarkets-before 7% of industries, increasing the minimum price of meats for supermarkets to give high taxes would be 4%, according to the Vice President of Sinafresp. But the products will have its value increased in 4% only if the sale price is equivalent to the value of the acquisition of the meat by the industries.
As the retailers embed its banks in prices-so the value of sale will be necessarily greater than the purchase, increasing the meat tends to be greater. On the other hand, the supermarkets might be unable to pass on in full the ICMS due to crisis or because of competition, he pondered Honorius.
The economics and research manager of São Paulo supermarket Association (Apas), Rodrigo Mariano said that the readjustment of prices of meat tends to be between 6% and 7%, with that this adjustment will be in line with the food inflation expected for 2017. "How come there''s no exit strategy, what''s going to happen in the end is a transfer," he said. Sought, the Abiec and Brazilian Association of Animal protein (ABPA), representing the meat industries, not commented on the decision of the Government of São Paulo.