States speed up investments in election year
The states started this election with accelerated investments, even with more restrained revenue growth. The combined investments of 26 states and the Federal District totaled R$4.24 billion in the first two months of the year, up 115% year over year.The data shows, according to experts in public accounts, that these expenditures by states are likely to remain strong after a boost in 2021, when investments closed the year with a real increase of 83.6% compared with the previous year. Financial surpluses from previous years are expected to help this, even though revenue flow has already shown a slowdown at the beginning of the year. State governments ended last year with R$140.2 billion in cash, R$61 billion more than the previous year.According to data from the fiscal reports of the states, the collection of sales tax ICMS totaled R$85.4 billion in the first two months of the year and is already behind inflation, with a real drop of 3.2% against the same period last year. ICMS is the main tax collected by state governments. Current revenues, which include other taxes and transfers from the federal government, advanced 2% in real terms in the same comparison.The revenue and expenditure data for the first two months were collected by Valor from the fiscal reports submitted by the states to the National Treasury Secretariat (STN). The expenditures with investments considered the primary capital expenditures. The values for the first two months of 2021 were updated by Brazil’s benchmark inflation index IPCA.For specialists, even though the situation is heterogeneous among the states, with considerable gains in ICMS collection or in specific revenues in some of them, the picture shows that the generalized and accelerated advance in tax revenues seen last year did not continue into 2022, said Manoel Pires, coordinator of the Fiscal Policy Observatory of Fundação Getulio Vargas’s Brazilian Institute of Economics (Ibre/FGV). For him, the scenario points to the end of a period of "fiscal bonanza." The growth of current revenues as a whole, he says, should give way during the year and follow more the performance of tax collection.The collection of revenues during the year is fraught with uncertainty, said Ursula Dias Peres, a professor of public policy at the School of Arts, Sciences and Humanities (EACH) of the University of São Paulo, and a researcher for the Solidarity Research Network. Besides the effects of the economic slowdown, she said, state...
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