Double Taxation and the Federal Union Tax Power on the Issue of Contributions

Abstract

The present work addresses the issue of double taxation as a limit to the exercise of the Union’s tax power in the institution of contributions provided for in Section 149 of the Brazilian Constitution. With the exception of situations in which the Constitution itself authorizes such double taxation, questions remain as to the extent of the prohibition on the eventual institution of new contributions by the Union that have a taxable event or calculation basis equivalent to other taxes granted to States, Federal District and Municipalities. The doubts materialize in the face of the increasing use of these contributions by the Union and possible gaps in the text of the Brazilian Constitution: Section 154, I, prevents double taxation, in the exercise of residual tax power by the Union, but it has a literal scope restricted to “taxes”; and Section 195, par. 4th, which refers to that provision, indicates the prohibition on double taxation, but only to the extent related to one of the types of possible contributions, which are those destined to the financing of social security. Through the review of the applicable fundamentals, the paper proposes that the prohibition against double taxation in matters of contributions should be found in the prohibition of excess and in the ability to pay principle, as corollaries of the constitutional system of distribution of tax powers.