Funrural Bill is not debt forgiveness

Contrary to what is being said, Bill No. 9252/17, by deputy Jerônimo Goergen, which extinguishes Funrural's liabilities generated by the decision of the Federal Supreme Court (STF) in March last year, does not deal with a pardon of debt or remission of a liability. The issue is, in fact, another case of legal uncertainty and a jurisprudential shift in relation to the justice system's understanding of tax collection.

It is not true, for example, that rural producers did not pay Social Security. It is necessary to be aware of two things: one is Funrural, a general contribution to the scheme, the other is the contribution linked to the retirement of rural people. The producer's retirement contribution is made monthly, through a base salary that serves as funding, in accordance with Law No. 8.212/91, and has never been questioned.

It is necessary to understand, firstly, that in the years 2010 and 2011, two collegial and unanimous decisions (11x0) in the STF, had, until that moment, pacified the matter and categorically, stating that the individual rural producer should not pay plus Funrural on gross revenue, considering it absolutely unconstitutional due to breach of the principle of tax equality. This is because urban people paid on payroll, while rural people were subject to payment of contributions on income.

This caused millions of producers, believing in the final word of the Supreme Court, to stop collecting social contributions based on this understanding. Many of these producers even returned to paying the tax just like the urban sector (20% of the payroll), therefore there is no widespread non-payment, as some claim.

“The rural producer was not only supported by the STF’s previous understanding that there was no longer a need to collect Funrural on gross revenue, but also supported by decisions in collective or individual legal actions, which also protected him from non-payment” , mentions Antonio Galvan, president of the Association of Soy and Corn Producers of Mato Grosso (Aprosoja).

However, in 2017, the Supreme Court changed its position and, by 6x5, started to consider the tax constitutional, that is, admitting that the tax could be charged on revenue from the commercialization of production.

Since then, a legal battle began, with some understanding that the past must be recalled and some maintaining that the Revenue could not charge the so-called liability, due to the lack of a legal basis, arguing, in this case, that the Senate, in September 2017, observing the 2010 and 2011 judgments of the STF, removed from the legal system the calculation basis, the rate and the method of charging (subrogation) of Funrural through a Resolution.

Aprosoja believes that the term “debt forgiveness” is misleading, as what the Revenue and the Union actually have is an expectation of law, an intention to collect, without any certainty, and this, in large part, due to account of a Refis prematurely approved at the end of 2017. This Refis, in the words of one of the country's greatest tax experts, Dr. Ives Gandra da Silva Martin, is the “first refis in the world of a non-existent debt”.

Thus, on the taxpayer's side, the rural producer, there is the conviction that there is no past debt, as everything that eventually stopped being collected was based on STF decisions.

Faced with this conflicting scenario, PL 9252 aims to restore stability and predictability in rural taxation, definitively regulating the contribution of all rural producers, to eliminate the Revenue's intention to charge what should not be charged, and reestablish secure targets for collection from January 2018 (timeframe).

For the president of Aprosoja, Antonio Galvan, “PL 9252 is a legal means of returning legal security to the countryside, because if Funrural remains without definitive regulation, it is unlikely that producers will confess the debt and agree to pay for what they should not ”.

In this case, the project that will be voted on by the Chamber of Deputies is a way for parliament to resolve this conflict, where everyone, in some way, wins. Both the tax authorities, who will have returned revenue from now on, and the producer, who will have peace and stability in their businesses to continue accounting for almost 30% of GDP, more than 40% of exports, and the generation of approximately 20 million direct and indirect jobs.

“Brazilian agriculture cannot continue experiencing this legal instability, hence the urgent need to approve PL 9252 in the National Congress to bring not only justice to rural producers, but also respect for one of the classes that contributes most to the base of the country’s economy”, points out Antonio Galvan.