Serra announces a program to stimulate car makers investments in SP
Folha de S. Paulo - 06/04/2008
The government of the State of São Paulo executed yesterday a program of incentives to the car makers' investments by means of the use of ICMS (state sales and services tax) credits. The credits may be used to buy goods and products, including electric energy bills. The makers will also be able to decrease the tax paid for imports of machinery and equipment. The car industry is going through its best moment in the country, with the production expected for 3 million vehicles this year. Notwithstanding some makers having taken part of the production to other States, São Paulo remains the main center of the car sector. The State has 63% of the 126 thousand jobs of the sector and it is responsible for little less than 50% of the national production of vehicles. The state of São Paulo's Governor, José Serra (PSDB), doesn't believe that the measure will stimulate the fiscal war against other States. "There is no fiscal war outline. The traditional mechanism of not charging the 12% of ICMS, which takes the company to other States, is not present. São Paulo is the main victim of the fiscal war, which is unconstitutional. But we have to defend ourselves. There is no tax exemption but deferment and credit so that we can invest and generate jobs". According to the agreement, makers will be able to use up to R$ 6.8 billion (US$ 4.2 billion) of such credits, which will be accumulated until November, 2010. The agreement also benefits the manufacturers of agricultural machines, buses and trucks. In order to be able to deduct the tax, the makers may present their projects with a minimum investment of R$ 30 million (US$ 18.4 million) to the Department of Development of the State. They will also have to abide by the "My First job" program (Meu Primeiro Trabalho), for the hiring of trainees. The makers have projected investments of R$ 11.8 billion (US$ 7.2 billion) up to 2010. According to the president of Anfavea (National Association of Automobile Manufacturers), Jackson Schneider, the agreement may increase the investments planned. According to the Secretary of Finance, Mauro Ricardo Costa, the government of São Paulo collects R$ 4 billion (US$ 2.5 billion) from the sector every year. Costa believes that, besides the car makers, the program will benefit the suppliers of materials, machinery and equipment of the civil construction.