Ecological ICMS and deforestation in Pará’s priority municipalities

Abstract

The Ecological ICMS consists of the resizing, according to environmental criteria,  of part of the monetary transfers of the ICMS (State Tax on Circulation of Goods  and Services) belonging to municipalities. The policy’s objective is to compensate  and incentivize environmentally beneficial actions. It was introduced in Pará with  the explicit purpose of contributing to the reduction of high rates of deforestation  through the promotion of municipal action. This study intends to verify if the initial  redistributive effects operated by the policy occurred in coherence with its intended  purpose. It analyses the destination of resources received due to the policy,  municipal expenditures with environmental management, and municipal territorial  power to understand the impact of introducing the environmental criteria on  municipalities with high rates of deforestation, which are included in the List  of Priority Municipalities of the Ministry of Environment. The analysis indicates that  the priority municipalities benefited from the introduction of the Ecological ICMS in  the State, without increasing its participation in the fight against deforestation. It  was concluded that there was some inconsistency between the redistributive effects  operated by ICMS Ecological in Pará and the objective of reducing deforestation,  as well as the policy’s theoretical basis.