Minas Gerais municipalities warn of R$ 28.6 billion loss due to tax exemptions

The Association of Minas Gerais Municipalities (AMM) has issued an open letter to candidates for the Minas Gerais state government regarding the financial impact of state tax exemptions on local municipalities. The entity reports that approximately R$ 28.6 billion in revenue has failed to reach municipal coffers due to state-level tax waivers for ICMS and IPVA.

According to technical data provided by the AMM, tax exemptions rose from R$ 6.9 billion in 2020 to a projected R$ 25.2 billion by 2026. Because municipalities are constitutionally entitled to 25% of ICMS and 50% of IPVA collections, these state incentives directly reduce local budgets. The AMM notes that while these policies aim to attract investment, the costs are distributed across all 853 municipalities, often exacerbating inequalities and disproportionately affecting smaller towns with fewer than 10,000 inhabitants.