The Ecological Goods and Services Tax constitutes a step toward shared environmental management among States and municipalities in Brazil. Nine Brazilian States have adopted the tax by making use of an opportunity established by the Brazilian Federal Constitution that allows States to define – through specific legislation – criteria for transferring resources from the Goods and Services Tax (ICMS), to which municipalities are entitled.
In this case, the designation of Ecological ICMS is due to the criteria that embrace environmental issues. The Ecological ICMS is an instrument created not only to compensate for environmental, but far more to encourage and (in some cases) even to contribute to environmental conservation. Each and every municipality within the States that have adopted the Ecological ICMS can benefit from resources of the Ecological ICMS. These municipalities may benefit, for example, through the creation of a protected area, either by the municipality itself or the State, or an increase in the surface area of an already existing protected area, or even by improving the quality of the conservation of the protected areas or some other specially protected area.
In order to facilitate the application of the Ecological ICMS, the percentages defined for each municipality are defined by use of a formula that measures the “Biodiversity Conservation Coefficient.”
For more information, contact raquel.breda@mma.gov.br, maria-carolina.hazin@mma.gov.br,or larissa.godoy@mma.gov.br