Electricity & VAT in Brazil
This week the theme "reduction of ICMS (the Brazilian VAT) on selected energy sources" is on the agenda of the Legislature. It should pass as per the preliminary reports.
The central question of this reduction, which is in principle very welcome as it will help to alleviate the cost of energy for consumers (business, institutional and residential), is: how will it be made possible?
If there is an equivalent reduction in government expenditure, great! It would mean that a challenge is being solved in the right way. Keeping the public budget unchanged.
But... if it is for the populist ways that Brazil has used for decades - especially on the eve of elections - of "bursting the original budget", once again, it would be just a decoy. In the end, there would be inflation that would affect everyone.
The question remains: what will actually be done?
Rafael Herzberg
Expert Member
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