Aprosoja Brasil says no to taxation on agriculture in Goiás

The Brazilian Association of Soy Producers (Aprosoja Brasil) and its state associates vehemently repudiate the proposal approved in the first round in the Legislative Assembly of the State of Goiás to impose a tax on agricultural activity in Goiás.

Official note follows: 

This proposal from the state government, if it is confirmed, will come at a bad time, as it will remove part of the investment capacity of rural producers in a scenario in which they are already reviewing their plans depending on the national political situation, such as, for example, many cancellations of orders for machines and other resource contributions.

If the state government's objective is to increase its cash flow under the justification of making investments, this argument falls apart due to several factors, since the state executive, with taxation, will reduce the volume of circulating resources to guarantee government cash flow. .

The inevitable side effects will be the cooling of the state economy, the reduction in revenue, the fall in GDP and the unwanted increase in informal commerce to avoid taxation.

In 2018, Aprosoja Brasil commissioned a study from the MB Agro consultancy, by economist Alexandre Mendonça de Barros, which analyzed the impacts of a possible end of the Kandir Law, effects similar to those of taxation on agribusiness in Goiás, such as reducing the price of land and the ability of producers to take credit, stifling production and causing sharp drops in GDP, jobs and revenue.

If taxation is confirmed, Brazil will begin to follow in the footsteps of the Argentine governments, which for decades have been taxing local production through retentions, a populist policy of taxing exports and which has resulted in stifling investment capacity, further bringing more poverty for the neighboring country.

Among the grain producing states, Goiás was the one that grew the most in recent years precisely because it did not tax its producers, unlike the states of Mato Grosso and Mato Grosso do Sul. States such as Tocantins and Maranhão have also been constantly threatened by mistaken tax policies , but the treasury's attacks came up against the mobilization of the State Aprosojas.

This is not the first time that rural entrepreneurs in Goiás have been threatened by state taxation. In one of the most important chapters in the history of class representation in the countryside, Aprosoja Goiás blocked the implementation of the so-called “70/30”, revoking the changes to the State Tax Code promoted by decree nº 8.548, of January 29, 2016.

Through decrees that have already been revoked, the Finance Department had determined that 70% of soybeans and corn produced in the State could be exported exempt from ICMS and 30% should be destined for the domestic market or, if exported, they would have to collect 12% of ICMS.

We do not believe the state government's arguments that investments will be made to reduce production costs. We have already seen this type of measure implemented in Mato Grosso with Fethab, in which the government of that state used producers' resources to pay public machine costs.

As incredible as it may seem, in most cases, we do not notice plans on the part of governments to downsize the machine to reduce costs and improve the economy as a whole. The reality is that some always look for alternatives to increase costs by creating taxes or increasing existing rates. Therefore, Aprosoja Brasil asks the state deputies of Goiás not to take this proposal forward.  

Check out the Official Note in full by clicking here.