ECOLOGICAL ICMS AS AN ENVIRONMENTAL PROTECTION INSTRUMENT

Abstract

This article reviews environmental taxation and describes the role of the Ecological ICMS as an instrument for environmental protection. The methodology used was a bibliographic review and documentary research. Economic Law is concerned with the legal treatment of economic policy, ensuring the defense of individual and collective interests. Environmental Law is related to article 225 of the Federal Constitution, seeking environmental balance and the rights of present and future generations. Economic Law and Environmental Law have two fundamental concerns: improving people’s well-being and the stability of the production process. They aim to serve the set of human activities substantiated by the expression quality of life. Environmental taxation allows the socialization of costs for environmental preservation by holding accountable those who contribute to environmental imbalance, incorporating the negative externalities caused by the production process into the cost. One instrument that has proven effective in this regard is the Ecological ICMS. The law allows 25% of the ICMS to have an environmental purpose. Thus, the Ecological ICMS is an incentive for municipalities to increase their spending in areas that improve the population’s quality of life. Municipalities that protect the environment more will receive a larger share of the ICMS transfer. The Ecological ICMS encourages municipalities to invest in environmental conservation, reducing pressures from urbanization and the production process. Amazonas has not yet legislated on the Ecological ICMS; however, it was the first state in the federation to institute legislation regarding Payment for Environmental Services. It is expected that the Tax on Goods and Services will allocate resources from the Tax on Sustainable Goods and Services to municipalities with conservation units, indigenous lands, investment in basic sanitation, collection and recycling of solid waste, measures to reduce carbon emissions, among other important socio-environmental issues.