University of São Paulo: Despite the pandemic, state and federal governments had higher tax collections in 2021
In the second year of the covid-19 pandemic, the fiscal situation of Brazilian states improved due to the increase in ICMS and the State Participation Fund, in addition to the fall in personnel expenses and social charges, according to bulletin 38 Covid-19. : Public Policy and Society Responses .
In an interview with Jornal da USP in Ar 1st Edition , professor Ursula Peres, from the School of Arts, Sciences and Humanities (EACH) at USP, a researcher at the Solidarity Research Network and one of those responsible for the newsletter, explained that “last year had a distinct feature because there was a recovery in state revenue. In 2020, the pandemic led to a drop in ICMS”.
The professor also highlights that, among the states that collected the most ICMS, there was a variation in fuel prices and inflation. The Union, on the other hand, had a high income tax collection, which led to a greater transfer of participation. “As tax collection increases, expenditures that are linked to taxes for education and health should increase”, she adds.
Ursula points out that spending on education has increased, which has been driven by states, particularly in the second half of 2021. However, not all have increased to the same extent.
Wage squeeze
Expenditures have increased in all sectors in education, but there has been a drop in salaries and charges in the last two years. “This sealing of personnel expenses, on the one hand, led to a salary squeeze and that brings pressure. This year, we have been following a series of negotiations by state governments, groups, corporations and careers, for increases in both public safety and education”, explains the professor.
Lack of coordination between the three spheres of power
Another point raised by Ursula is that the investment of the states is being greater than that of the federal government. “There needs to be follow-up, planning and investment to recover and actions in these areas of public policies.”
The health area had a more adequate investment compared to education, due to the urgency required by the health crisis. But, for the teacher, it was not the lack of resources that got in the way, “it was a difficulty in having political coordination between the three spheres”, which made it difficult to respond to public demands.
The states closed with R$ 140 billion in cash in December 2021. So, there is a reserve. However, with the war in Ukraine and international trade being affected, it is not known what the behavior of ICMS collection will be. “There may be inflationary pressure, depending on how this whole fertilizer issue is here in Brazil. We have again a scenario of uncertainty that is not due to the pandemic, but due to this war”, says Ursula.