ABSTRACT
This paper assesses the end of the tax incentives given to pesticides, based on the constitutionality analysis lawsuit (ADI 5553) that will be judged by the Supreme Court, which discusses the exemptions of ICMS and IPI on these products. Based on the last Brazilian Census Survey we evaluate the tax incidence of ICMS and IPI on agricultural expenditure and profitability of the agricultural establishment in some diferent scenarios. A 15% increase in pesticide prices would have an impact on costs and profitability of approximately R$ 4 and R$ 6.8 billion (-7%), respectively. This represents a value of almost R$ 10 billion less than calculated by a similar study released by the Sindicato Nacional da Indústria da Defesa Vegetal (Sindiveg) for a scenario of equivalent price increase. We discussed not only the impact results in income of the producer, but also the capacity of the extrafiscal function of the tax to regulate the use of pesticides and redirect possible changes in decision making on pest control methods, enabling the transition to a more sustainable and healthy agriculture. Finally, we conclude that, regardless of the outcome of the judgment of ADI 5553, the problem of negative externalities resulting from the use of pesticides does not end with the end of fiscal incentives to them, as they depend on the formulation of a more balanced public policy within the scope of the agricultural sector that would guarantee the defense of the population’s health and environmental sustainability.
KEYWORDS
Agrichemicals; Regulation; Externalities; Subsidies, government