UPDATE 1-Brazil's Levy fails to convince states on tax unification

viernes 10 de abril de 2015 14:47 GYT
 

(Recast with meeting outcome, Levy and state official comments)

By Alonso Soto

GOIANIA, Brazil, April 10 (Reuters) - Brazilian Finance Minister Joaquim Levy on Friday failed to convince all of the country's states to unify an inter-state tax that he said is crucial to reduce legal uncertainties and bolster investment.

Speaking after a meeting with the heads of finance of Brazil's 27 states in the central city of Goiania, Levy said all but four states agreed to gradually unify the rate of the ICMS tax. The government needs the approval of all states to increase its chances of passing legislation that unifies the tax.

"I believe we made significant advances today, which gives us a base to continue," Levy told reporters. "Resolving this issue is crucial for our economy to resume growth and is part of our efforts to put our finances back in order."

During her first mandate, President Dilma Rousseff failed to pass an ICMS tax reform through Congress amid strong resistance from some states that feared losing tax revenues. Other states were also worried that a convergence would leave them without a key fiscal tool to attract companies.

This time around, a serious deterioration of states' fiscal accounts prevented Levy from convincing Parana, Rio Grande do Norte, Pernambuco and Ceara to agree with the proposal.

Rousseff, who is also trying to balance the government's depleted fiscal accounts, is pushing for a series of smaller reforms to spark business and breathe life into a once-booming economy. Latin America's largest economy is expected to contract as much as 1 percent this year.

One of those reforms is the simplification of the tax system, which is considered one of the most complex in the world with a series of federal, state and municipal duties.   Continuación...