The 2015 budget
proposal, sent by the government to Congress in late August, was
prepared with the forecast of non-recurring or atypical revenues of
R$27.5 billion, higher than the one forecast for this year. The numbers
indicate that, in order to achieve what it sets out to, the government
may have planned for next year a new Refis — the tax-settlement program
that offers interest and fine discounts to end collection disputes.
An atypical or non-recurring revenue is the one that is not part of the regular flow of tax collections in the ongoing fiscal year. It generally refers to previous years and are due to tax actions carried out by the Federal Revenue and by the Office of the Attorney-General of the National Finance (PGFN). By definition, the final amount to be obtained with this type of revenue is unpredictable, but the government tends to project a certain amount it expects to obtain in the budget proposal of each year, based on information it has about court litigation close to conclusion or on political decisions, such as the offering of a settlement with favorable conditions to taxpayers.
In the last few years, not only has the federal government become dependent on atypical revenues to make its numbers add up. Also state governments resorted to debt-settlement programs with discounts of interests and fines as a way of strengthen their coffers and keeping or raising their spending.
This may have been an alternative to the increase of tax or contribution rates or the creation of other taxes, when there’s strong rejection from public opinion to the increase of the tax burden. Resorting to atypical revenues transcends the governments’ colors. In 2002, for example, the government had one of its largest inflows of non-recurring revenues.
Portal Tributário, a website that compiles tax information, made a survey of all laws that instituted settlement plans for federal tax debts. Since 2000, it found 11 laws, some of them only reopening the payment deadline, sometimes with more favorable rules or a new cut date for debts that will be object of the settlement, which in practice means a new program. The average, therefore, is of one Refis for every 1.2 year.
In 2000, the settlement of tax debts gained the pompous name of Fiscal Recovery Program, or Refis, aiming at regularizing debts of taxpayers with the Federal Revenue and the National Social Security Institute (INSS) that were due until February 2000. In 2003, the new program gained the acronym PAES, but it was a sort of Refis II, with the goal of regularizing debts with the Federal Revenue and the PGFN.
In 2006, Refis III gained the PAEX acronym, with installments for the payment of debt with the Federal Revenue and the INSS. Refis IV, nicknamed Refis of Crisis, was instituted in 2009 at the height of the global financial crisis, which put Brazil in recession. In 2013, the Refis of Crisis was reopened, the same happening in 2014. There was also the Refis of agencies and foundations, the Refis of banks, for settlement of debt related to social contributions PIS and Cofins, and the Refis of profits abroad, allowing the payment in installments of corporate income tax and social contribution on net profit.
The federal government has become kind of “Refis-dependent.” The Budget Directives Law (LDO) of each year contains an attachment of fiscal risks, in which the Federal Revenue informs how much the atypical or non-recurring tax collection in the two previous years was. The chart below shows the amounts since 2008, with forecasts for 2014 and 2015. In first place, the chart shows that the atypical revenue every year is very high. The records in the period here considered were in 2009 and 2013.
Last year, for example, the non-recurring revenue of R$28.3 billion corresponded to 0.58% of GDP. The primary surplus of the central government (comprised of Treasury, Social Security and Central Bank) in 2013 was of R$75.3 billion, or 1.55% of GDP. That is, the atypical revenue was responsible for more than one-third of the central government’s surplus last year. In 2014, something similar will happen, and based on what is projected in the budget proposal, also in 2015.
The forecast in the 2015 Budget is of R$27.4 billion in non-recurring revenue. Of this total, R$4.8 billion will be obtained with tax actions related to the income tax. In the case of the Social Contribution on Net Profit (CSLL), the government estimates obtaining an extra revenue of R$1.1 billion. Lawsuits launched by the Federal Revenue and the PGFN related to social contribution Cofins are expected to produce R$3.57 billion.
There is, however, the forecast of a non-recurring revenue of R$15 billion that is not classified, that is, it’s not related to any tax or contribution, indicating this may be the expected revenue from a new settlement of tax debts. The government’s “Refis-dependence” is a bad stimulus to taxpayers that pay their taxes on time.
An atypical or non-recurring revenue is the one that is not part of the regular flow of tax collections in the ongoing fiscal year. It generally refers to previous years and are due to tax actions carried out by the Federal Revenue and by the Office of the Attorney-General of the National Finance (PGFN). By definition, the final amount to be obtained with this type of revenue is unpredictable, but the government tends to project a certain amount it expects to obtain in the budget proposal of each year, based on information it has about court litigation close to conclusion or on political decisions, such as the offering of a settlement with favorable conditions to taxpayers.
In the last few years, not only has the federal government become dependent on atypical revenues to make its numbers add up. Also state governments resorted to debt-settlement programs with discounts of interests and fines as a way of strengthen their coffers and keeping or raising their spending.
This may have been an alternative to the increase of tax or contribution rates or the creation of other taxes, when there’s strong rejection from public opinion to the increase of the tax burden. Resorting to atypical revenues transcends the governments’ colors. In 2002, for example, the government had one of its largest inflows of non-recurring revenues.
Portal Tributário, a website that compiles tax information, made a survey of all laws that instituted settlement plans for federal tax debts. Since 2000, it found 11 laws, some of them only reopening the payment deadline, sometimes with more favorable rules or a new cut date for debts that will be object of the settlement, which in practice means a new program. The average, therefore, is of one Refis for every 1.2 year.
In 2000, the settlement of tax debts gained the pompous name of Fiscal Recovery Program, or Refis, aiming at regularizing debts of taxpayers with the Federal Revenue and the National Social Security Institute (INSS) that were due until February 2000. In 2003, the new program gained the acronym PAES, but it was a sort of Refis II, with the goal of regularizing debts with the Federal Revenue and the PGFN.
In 2006, Refis III gained the PAEX acronym, with installments for the payment of debt with the Federal Revenue and the INSS. Refis IV, nicknamed Refis of Crisis, was instituted in 2009 at the height of the global financial crisis, which put Brazil in recession. In 2013, the Refis of Crisis was reopened, the same happening in 2014. There was also the Refis of agencies and foundations, the Refis of banks, for settlement of debt related to social contributions PIS and Cofins, and the Refis of profits abroad, allowing the payment in installments of corporate income tax and social contribution on net profit.
The federal government has become kind of “Refis-dependent.” The Budget Directives Law (LDO) of each year contains an attachment of fiscal risks, in which the Federal Revenue informs how much the atypical or non-recurring tax collection in the two previous years was. The chart below shows the amounts since 2008, with forecasts for 2014 and 2015. In first place, the chart shows that the atypical revenue every year is very high. The records in the period here considered were in 2009 and 2013.
Last year, for example, the non-recurring revenue of R$28.3 billion corresponded to 0.58% of GDP. The primary surplus of the central government (comprised of Treasury, Social Security and Central Bank) in 2013 was of R$75.3 billion, or 1.55% of GDP. That is, the atypical revenue was responsible for more than one-third of the central government’s surplus last year. In 2014, something similar will happen, and based on what is projected in the budget proposal, also in 2015.
The forecast in the 2015 Budget is of R$27.4 billion in non-recurring revenue. Of this total, R$4.8 billion will be obtained with tax actions related to the income tax. In the case of the Social Contribution on Net Profit (CSLL), the government estimates obtaining an extra revenue of R$1.1 billion. Lawsuits launched by the Federal Revenue and the PGFN related to social contribution Cofins are expected to produce R$3.57 billion.
There is, however, the forecast of a non-recurring revenue of R$15 billion that is not classified, that is, it’s not related to any tax or contribution, indicating this may be the expected revenue from a new settlement of tax debts. The government’s “Refis-dependence” is a bad stimulus to taxpayers that pay their taxes on time.
By
Valor Econômico
Sep 25 2014
