São Paulo reduces textile industry ICMS from 12% to 7%
Folha de S. Paulo
The government of São Paulo reduced yesterday the ICMS (State Sales and Services Tax) for the textile and clothing industry. The tax rate went from 12% to 7%. Entrepreneurs say the measure will contain the exodus of companies based in São Paulo to other regions, attracted by the tax war fought between the States. The reduction of the tax will benefit nearly 16 thousand companies in São Paulo that directly generate 500 thousand jobs. The State holds nearly 33% of the national textile GDP (the sum of the production of final goods in the sector).
Over the past five years, the reduction or exemption of the ICMS has intensified so as to stimulate migration of companies. Mato Grosso do Sul and Goiás exempt companies from the tax. The tax rate in Rio is 2.5% and, in the region called Zona da Mata, in Minas Gerais, it ranges from zero to 3%. The Governor of São Paulo, José Serra, minimized the tax war among the States. He affirmed the measure taken in São Paulo is an instrument of protection of the Brazilian Industry. According to him, the reduction does not solve all the problems faced by the textile industry, among them unfair competition, "but it is a relief, an incentive", said the Governor.
The assertion the tax benefit will help them face global competition, mainly from China, has been repeated by the entrepreneurs. "Without equal opportunities to compete against the Asian products, the reduction of the ICMS is very important to keep the investments and jobs in São Paulo", said Rafael Cervone, President of Sinditêxtil-SP (Union of the Textile Industries of the State of São Paulo).