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Extinction of additional freight for renewal of the Merchant Navy will favor navigation in Brazil, says CNA

Posted by Rafael Moro
The Economic Working Group and the National Commission for Logistics and Infrastructure of the Confederation of Agriculture and Livestock of Brazil (CNA) met, this Tuesday (13), to discuss a proposal for the extinction of the collection of the Additional Freight for Renewal Merchant Navy (AFRMM).

The proposal of the Ministry of Economy is to gradually reduce the AFRMM tax rate on imports until full extinction after five years, with differentiation for long-haul navigation, coastal shipping and river and lake navigation. The measure will have positive effects on the shipping sector, such as reducing maritime costs and bureaucracy, increasing competitiveness and improving the port system.

According to estimates by the agency, only last year, the collection of fertilizers, fertilizers, salt, wheat flour, cereal grains and other products resulted in the collection of R $ 4.2 billion. In the cases of the North and Northeast regions, the collection of AFRMM is suspended until 2022.

"We have to encourage coastal shipping and in rivers, as production will continue to grow and we will need more vessels for disposal, but the collection of AFRMM weighs heavily on production," said the president of the National Commission for Infrastructure and Logistics at CNA, Mário Borba.

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According to CNA's strategic affairs coordinator, Elisangela Pereira Lopes, between 2013 and 2020, R $ 2.2 billion were invested in the construction of 500 barges and other equipment for inland navigation, 80% of which was financed by the Merchant Marine Fund (FMM) . In this seven-year period, the resources spent corresponded to just under half of the collected by AFRMM in 2019.

The Undersecretary of Fiscal Policy of the Ministry of Economy, Erik Figueiredo, considers AFRMM a complex mechanism, which makes imports and freight within Brazil more expensive, in addition to discouraging navigation as a means of draining production.

According to him, the portfolio has already managed to demonstrate the economic reasons for withdrawing the tax, either through consideration or tax waiver. Now, the final decision depends on a political position.

“A CNA study shows the impact and increase in agricultural production with AFRMM. From this, we were able to show that the reduction or the extinction of the collection could reduce the cost of the basic basket by almost 5% ”, he declared.

“We are in favor of a gradual reduction in collection, especially for fertilizers, as this will reduce the cost of the producer. It is an old demand by the CNA so that we can reduce the Brazilian cost and make the legislation less bureaucratic, ”said the coordinator of the CNA Economic Center, Renato Conchon.

The Confederation also pointed out that, from January 2018 to June 2020, the Federal Government raised R $ 9 billion with the AFRMM, but only R $ 2.1 billion was invested, not always for the promotion of navigation or cabotage.

In the opinion of Renato Conchon, the productive sectors are paying the fund, but the amount used for the promotion of navigation and the construction of barges, for example, is far below the volume of funds collected. On September 22, 2020, AFRMM's "cash" was more than R $ 7 billion.

Another theme discussed at the meeting was Ordinance ME No. 329/20, which publishes the complete list of normative acts under current decrees and approves the plan to comply with Decree No. 10,139 / 2019, within the scope of the Ministry of Economy.

The meeting also had the participation of the vice president of the CNA and president of the Federation of Agriculture and Livestock of the State of Espírito Santo (Faes), Júlio Rocha, and the lawyer of the Legal Counsel of the CNA, Viviane Faulhaber.