Comments on the Constitutional Norms


Comments to the Article 150


(12) Restrictions of the Public Administration for Immunity purposes > Exception of the exception = Rule


46. The main question on the possibility of an entity of the State charge tax, or not, on another entity of the State lies on the different between the public and private sphere. If, by one side, private persons can do some activities eminently public, by concessions, permissions, authorizations, and with tax privileges exemption and immunities; by another, the State can, in some cases, develop works in the private sphere; when the State does this, the effect is its equalization, for tax purposes, with the agents of private nature which exercises companies activities. Let's see, then, how the mentioned mechanism was structured in the constitutional norm and the reasons of this structure.

§46b. Economical activities that has clearly profits purposes, exercised by the State, through State companies and companies with public and private capital, can not have immunity to tax charge, because this can implies in negative influence to the market; this because if the State (while agent which exercises business activity) has the liberty of do not pay tax, being immune, then the State will be in clearly advantage in relation to the private sector, or, in another words, will be competing unfairly. We can express that the manifest purpose of profits is indicated, in the constitutional text, by reason of the necessity of regency (of some economical activities developed by the State) by the applied norms to private business.

47. Concerning to activities which imply in a counterpart, or payment of prices, or payment of tariff by the users, these activities shall has the possibility of be divided (be capable of identify, individualize, the users), being also important note which these activities also need be restricted to the economical character of activities developed by private companies; the activities can not have social function which are essential to the collective, typically related to the aims of the State, otherwise it would fall into the rule of immunity from taxation of an State's entity over another entity. Government only charges taxes on government when the State pass to develop activities which are not typically of its nature. It is in this sense which we shall understand the Brazilian constitutional text, which is of bad writing. Also is important note to the fact that prices and tariff, in the positive Brazilian law, are different of rates; while rates are related to the mandatory use of service, and are truly tax species; tariffs and prices are related to services which are of not mandatory utilization, being counter-parties in terms of civil-obligation.

48. And concerning to the obligation of a State entity, which is in the condition of a person who promises buy a real estate, to pay the taxes related to the operation of buy the real estate (ITBI - Tax on the transfer of real estate), maybe, we can express that the reason of this legislative option is based on the necessity of balance of economical power which the Brazilian Constitution of 1988 sought to provide the City, observing that, before (in another time), such tax was not related to the Municipality, but to the Federal Entity.


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Rafael De Conti, Rafael Augusto De Conti, Brazilian Tax Lawyer, Lawyer in Brazil