Project suggests abandoning market value as the basis for the tax on property of motor vehicles and provides discounts for less polluting cars
A new Proposed Amendment to the Constitution (PEC), in progress in the Chamber of Deputies, proposes a profound restructuring in the way the IPVA is charged in Brazil. The project, which has the support of 204 parliamentarians, suggests the abandonment of the current model – based on the market value of the vehicle by the Fipe Table – in favor of a physical criterion: the weight of the car. The proposal also establishes a tax ceiling, determining that the total amount of the tax cannot exceed 1% of the sale price of the asset.
The authors of the measure argue that the taxation on movable assets in the country is distorted, since it is levied on assets that suffer continuous depreciation. To support the thesis, the text cites international examples, such as Japan and the United States, where the weight or technical characteristics of the vehicle serve as the basis for the calculation. In addition, the PEC authorizes states to create differentiated rates or progressive discounts to encourage the adoption of less polluting technologies, linking the tax to the sustainability agenda.
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The parliamentarians, however, took advantage of the PEC to include a ‘tortoise’: the name given to other changes, unrelated to the main theme, which are discreetly included in the text, in order to go unnoticed. The ‘tortoise’ of the text provides for a strict limit for expenses with institutional advertising, set at 0.1% of Net Current Revenue, with an express prohibition of advertisements that result in personal promotion of public officials. In the Legislative Branch and in the Courts of Accounts, the ceiling for total expenses would be 0.4%. Agencies that exceed these rates would be prevented from granting readjustments or making new hires.
The procedure requires that the proposal first go through the Commission on Constitution and Justice and Citizenship (CCJ) for analysis of admissibility. If it advances, it will be submitted to a special committee and, later, will need to be approved in two rounds of voting in the plenary of the Chamber, with a qualified quorum, before going to the Senate.
