December 5, 2014

Ag Workers in Brazil Request Postponement of New Licensing Law

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The Federation of Agricultural Workers in the State of Rio Grande do Sul (Fetag/RS) has petitioned the Brazilian National Transit Counsel (Contran) for a postponement of 180 days in the implementation of the new law requiring that farmers obtain license plates for their agricultural machinery and pay additional taxes on the machinery. The law, which passed the Brazilian Congress in July of 2013, is scheduled to take effect on January 1, 2015.

The president of Fetag/RS Elton Weber, explained that the six month postponement is needed for the Brazilian Congress to resend or at least make modifications to the law. They have also sent the same request to the Minister of Agriculture, the Brazilian Transit Authority, and the state Legislature in Rio Grande do Sul.

The new law will impose a tax and require license plants for tractors, combines and other equipment that was manufactured starting in August of 2014. Equipment manufactured before that date will not require the license plates or be liable for the tax.

Farm organization opposed to the new legislation contend that the machinery covered by the new legislation rarely travels on the highways of Brazil and certainly should not be treated equal to passenger vehicles, trucks, or buses. They contend that the new legislation will greatly increase costs for farmers and that they have no way to pass along the costs and that the agricultural sector is being unfairly targeted by the new legislation.

The license and the 3% IPVA tax on the value of the equipment is expected to cost farmers R$ 1,000 to R$ 5,000 per machine (US$ 400 to US$ 2,000). There are 10,000 to 12,000 units of agricultural machinery manufacture per year in Brazil that would be required to pay the tax and obtain a license

Officials from Fetag/RS have indicated that if they do not receive a positive response to their petition by December 20th, they would not rule out the possibility of mobilizing farmers in the state to protest the new law.