Entities defend higher collection with ITR for cities in crisis” points out article of Broadcast Político
“While a tax over the real estate property, ITR is clearly inefficient. It does not serve to the collection function, nor even to the function of stimulating the productive use of land”, affirms the economist of Bernard Appy, who is director of Fiscal Citizenship Center (CCiF), to Broadcast Político. The declaration reinforces one of the reasons that the Rural Property Tax is called the “ten-real tax”. Read the entirety of the article.
04:00 PM States on Focus: Entities defend greater collection with ITR for cities in crisis
By Nicholas Shores
São Paulo, 06/25/2020 – Brazil collected R$ 1.773 billion with the Rural Territorial Tax (ITR) last year, only 0.12% of the whole collection of the Country, but entities defend that updates in the regulations of such tax could multiply the revenue of cities, and relieve cashes emptied upon the crisis of the new coronavirus.
City Halls having agreements with the Brazilian Federal Revenue Service are entitled to receive 100% of ITR paid by their taxpayers if they charge and inspect the tax, which is currently the case of 1,200 out of 5,570 Brazilian cities, approximately one fifth of the total. The others receive a share of 50% of what the Federal Government collects with the tax.
The advocates of changes in the collection of ITR comment that today it is known as the “ten-real tax”, for being calculated based on the self-declaration of rural landowners on how much their own land worths. Representatives of the agricultural sector, on the other side, fear that inspectors act in “bad faith” to, supposedly, inflate the value of the real estate properties and, thus, the charged tax.
To illustrate what they point out as a dysfunction of the tax in the largest part of the cities, Instituto Escolhas, and the National Confederation of the Cities make the comparison with its ‘cousin’, the Urban Property Tax (IPTU), which in 2019 generated R$ 11.16 billion only to the city of São Paulo.
Escolhas promotes today (25), from 04:00 PM (Brasília time), the online seminar “How is the Rural Property Tax able to help the cities to improve their finances at times of crisis?” One of the participants is the Finance secretary of Rio Verde (GO), Enio Freitas de Sene. Among the cities under agreement with the Brazilian Federal Revenue Service, his city was the second highest collector of ITR in 2018, with R$ 10.12 million.
In the locations that are not dedicated to the inspection of the tax, however, the trend goes in the opposite direction. “While a tax over the real estate property, ITR is clearly inefficient. It does not serve to the collection function, nor even to the function of stimulating the productive use of land”, affirms the economist of Bernard Appy, who is director of Fiscal Citizenship Center (CCiF), but participates in Escolhas in personal character, to Broadcast Político.
The first reason pointed out by the project manager of the institute, Jaqueline Ferreira, to such inefficiency is the fact that the value of bare land (VTN), calculation base for ITR, is self-declaratory. “It is declared in a very low value, achieving R$ 2 per hectare”, says she. Based on the land price assessed by IEG/FNP consultancy, Escolhas estimated that the total collection with ITR would jump from R$ 1.5 billion in 2018 to R$ 5.8 billion a year.
The study of the institute has based the bill 5135/19, of authorship of senator Flávio Arns (Rede-PR), which aims at promoting changes in ITR. The last movement of the matter was in the Agriculture and Land Reform Commission, under report of senator Chico Rodrigues (DEM-RR).
The consultant of the Brazilian National Confederation of Cities, Eudes Sippel, affirms that CNM aims at the effective municipalization of ITR, and presented such claim upon different discussions of the tax reform in National Congress.
Representatives of the Brazilian Confederation of Agriculture and Livestock (CNA) some times talked about complaints received from members about abusive charges of ITR in some cities, and even announced they would make a complaint letter to the respective city halls about the issue. A technical note prepared by the entity last year guides landowners with information to “make it difficult” the actuation of professionals that “work in bad faith in favor of the increase of the collection of the city halls”.
Broadcast Político looked for CNA with a request of comment on eventual complaints and a positioning on the reformulation of ITR, but did not have return.