Samuel Kinoshita, the Secretary of Finance and Planning for São Paulo, has taken a strong stance against claims that a recent reform in the tax substitution regime (ST) of ICMS will trigger a 25% price increase in cosmetics. He argues that the sector's assessments are based on two major errors. The first is the misunderstanding of the measures in place; a new decree has accelerated the timeline for tax credit refunds from 24 months to just 12 months, affecting all sectors that have been removed from the ST regime, not just cosmetics. Kinoshita emphasizes that this change is aimed at easing the financial burden on businesses rather than exacerbating it.

Second, he clarifies the nature of tax substitution itself, which is a method of tax collection that shifts the responsibility to a specific point in the supply chain rather than allowing for a pre-collected tax at the manufacturing stage. With the adjustment in the tax regime, products will be available in stores without the previously anticipated tax load, which contradicts the industry’s claims of heightened tax burdens. Kinoshita believes that the alarm over potential price hikes may have been instigated by certain companies seeking to influence public perception or policy.

Overall, his commentary sheds light on the complexities of tax reform and its ramifications for pricing in the cosmetics sector, and aims to reassure consumers that price increases are not warranted by the recent changes. Kinoshita's defense of the new tax measures is a critical part of the ongoing conversation about tax policy in Brazil, particularly as it pertains to specific industries like cosmetics that may fear disruptions due to regulatory changes.