**4. The tax benefits for the hydro-intensive industries of the Complex of Pecém: a debate on its (un)constitutionality**

The economic policy of the Estate of Ceará is inserted in the context of neo-developmentism [26], associated with neo-extractivism [27]. Both share the idea of progress with unlimited growth, a perspective that justifies the appropriation of environmental goods and the conception that the state and the market consist of complementary fields, to provide economic growth, powered by large-scaled enterprises.

In such context, it is important to highlight the fundamental role the state plays in the contribution of these large-scaled enterprises. The case of CIPP is not different from others, for which the state works as a factor of stimulation and facilitation for their installation. The specific literature indicates the recurrence of environmental conflicts involving a productive hydro-extensive matrix subsidize by the state. In Ceará, the following cases are remarkable: the agribusiness in the Chapada do Apodi [28], the project of mining of uranium and phosphates in Santa Quitéria [29, 30] and the shrimp production in traditional Quilombos' lands [31].

A distinctive trace of those enterprises is in the emphasis of this research: the state subsidizing of the enlargement of environmental goods supplies, violating the nature of water as a human right and a common good [32], as discussed in the previous chapters.

Having said that, the analysis goes through the comprehension on the juridical nature of the apparatus of the water bill. It is consistent with the propitious way that establishes the public prize and tax for the industrial consumers, presupposed in the National Policies (Federal Act n. 9433/1997) and in the State Policy of Hydric Resources (State Act n 14.844/2010). Both laws state the function of the apparatus, which is to guarantee a rational

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The Act that instituted the National Policy of Hydric Resources has one chapter dedicated to the apparatus of billing water, discussing on its criteria, later regimented by the State Decree n. 32.032, on September 2, 2016. It confirms the prime goal of water bill, seen as an instrument

In Ceará, it is used as a model of billing water different from the billing used in other hydro-

*… it is characterized by its binomial form, grounded in its marginal cost of management of hydric resources and in its capability of payment of each category of consumer. […] However, in consequence of the necessity of structuration of the management authority, the universalization of grant, as well as a wider comprehension and acceptance of the consumers, the charging was implemented in a mononomial* 

For the juridical doctrine, billing water is an instrument capable to promote sustainable development. Because of its character of public good of common use, it is affirmed that "the payment of the use does not imply in the creation of any kind of right on the water, as already

In the case of Ceará, the Decree that regiments the billing water presupposes different taxes for "enterprises considered as structuring for the State of Ceará" (Article 9, Decree n.

The unsustainable water demand of the project caused the State of Ceará to approve, by law, the creation of the Emergency Water Charge, which burdened the water consumption of the thermals. In reaction to the measure, the two largest coal-fired thermals, Pecém I and II, contacted the National Electric Energy Agency (Aneel) stating that they would not be able to continue operating if the price adjustment of the energy tariff is not allowed, as a way of compensating the increase in water costs. The request was rejected by the Agency and later

The Contingency Tariff consists of an instrument authorized by State Law 16.103/2016, which created the Contingency Tariff for the use of water resources during a critical situation of scarcity. The norm was regulated by the Resolution of CONERH (Council of Water Resources

The Decree defines the following criteria for the Industrial Water Bill: Article 3: The billing for the use of raw water in the domain of Ceará will vary according to the following categories of users, for surficial and underground collection: II – Industry: (a) The supply of water with complete collection and adduction by COGERH: T = 2.067 Reais and 59 Cents per 1000 m; (b) The supply of water with complete or partial collection and adduction by the user from water sources, such as reservoirs, rivers, lagoons, underground lakes and rivers or channels: T = 601 Reais and 03 Cents per 1000 m.

*form, admitting taxes only defined by the water consumed. (Consumer tax)* [34]*.*

observed, for being a public good, it is inalienable [35].

of the State of Ceará) number 006/2016, providing that:

32.032/2016), which threatens the prime goals of the instituted bill.

use of water.

by the Judiciary.

9

of rationalization of water use.<sup>9</sup>

graphic basins. It is as follows:

The character of economic worth that is also attributed to water by the normative system is defined by Enrique Leff as a process of privatization of water, which would be "promoted in a narrative that intends to obtain the 'rational use and efficient management of water,' turning the users into payers for the 'real cost' of the resource supplying." And, in addition to that, it is characterized as one of the "strategies of the expansion of the natural capital to absorb environmental goods and services, in other words, the natural common goods of humankind." However, large-scaled enterprises happen to be polluting and hydro-extensive, in which we observe the perverse inversion in the logic of pricing of the environment: those with major economic capacity receive tax benefits from the state.

Here, there is the core of the proposed work, which is the analysis of the anti-law nature and the hydric injustice in the subsidizing granted by the state to the Industrial and Port Complex of Pecém. But before going into the analysis itself, it is important to briefly define the enterprise in question. Only for the Steel Company of Pecém, there are innumerous other public grants, and their operation obtained the grant of 1500 L a second for the company. Also, the infamous thermal-electric power plants of Pecém are owners of grants of voluminous water flows, available in the Portal Hidrológico do Ceará (Hidryc Website of Ceará, in free translation) Below follow the systemized grants:


To guarantee the feasibility of the hydric consume of the enterprise, the fifth part Eixão das Águas was inaugurated in 2014. It consists in a mean for transferring of water and interlinking of hydric basins. Besides that, the other source of water supply for the thermal-electric power plant of Pecém was the Reservoir of Sítios Novos. Its data in 2015 indicated it supplied a volume of 600 L a second, which caused its drain. In February 2017, its volume was 0.07% of its natural capacity, according to Portal Hidrológico [33].

Observing the investigative purposes of this research, initially the analysis is centered in the benefits that grant a reduction of 50% in the water tax for thermal-electric power plants and for the steel industry of the Complex. It is also remarkable how the tax subside is inserted in a complicated contribution of fiscal reductions and the availability of public infrastructure for the enterprise. This is State Law No. 14,920/2011 and State Law No. 14456/2009.

Having said that, the analysis goes through the comprehension on the juridical nature of the apparatus of the water bill. It is consistent with the propitious way that establishes the public prize and tax for the industrial consumers, presupposed in the National Policies (Federal Act n. 9433/1997) and in the State Policy of Hydric Resources (State Act n 14.844/2010). Both laws state the function of the apparatus, which is to guarantee a rational use of water.

A distinctive trace of those enterprises is in the emphasis of this research: the state subsidizing of the enlargement of environmental goods supplies, violating the nature of water as a human

The character of economic worth that is also attributed to water by the normative system is defined by Enrique Leff as a process of privatization of water, which would be "promoted in a narrative that intends to obtain the 'rational use and efficient management of water,' turning the users into payers for the 'real cost' of the resource supplying." And, in addition to that, it is characterized as one of the "strategies of the expansion of the natural capital to absorb environmental goods and services, in other words, the natural common goods of humankind." However, large-scaled enterprises happen to be polluting and hydro-extensive, in which we observe the perverse inversion in the logic of pricing of the environment: those with major

Here, there is the core of the proposed work, which is the analysis of the anti-law nature and the hydric injustice in the subsidizing granted by the state to the Industrial and Port Complex of Pecém. But before going into the analysis itself, it is important to briefly define the enterprise in question. Only for the Steel Company of Pecém, there are innumerous other public grants, and their operation obtained the grant of 1500 L a second for the company. Also, the infamous thermal-electric power plants of Pecém are owners of grants of voluminous water flows, available in the Portal Hidrológico do Ceará (Hidryc Website of Ceará, in free transla-

**4.** Grant n. 577. Granted volume: 2.57.944-flow 891 1/s-Recipient TERMOCEARÁ LTDA.

To guarantee the feasibility of the hydric consume of the enterprise, the fifth part Eixão das Águas was inaugurated in 2014. It consists in a mean for transferring of water and interlinking of hydric basins. Besides that, the other source of water supply for the thermal-electric power plant of Pecém was the Reservoir of Sítios Novos. Its data in 2015 indicated it supplied a volume of 600 L a second, which caused its drain. In February 2017, its volume was 0.07% of

Observing the investigative purposes of this research, initially the analysis is centered in the benefits that grant a reduction of 50% in the water tax for thermal-electric power plants and for the steel industry of the Complex. It is also remarkable how the tax subside is inserted in a complicated contribution of fiscal reductions and the availability of public infrastructure for

the enterprise. This is State Law No. 14,920/2011 and State Law No. 14456/2009.




right and a common good [32], as discussed in the previous chapters.

economic capacity receive tax benefits from the state.

tion) Below follow the systemized grants:

GERAÇÃO DE ENERGIA S/A;

GERAÇÃO DE ENERGIA S/A;

ergina LTDA;

148 Taxes and Taxation Trends

**1.** Grant n. 41. Granted volume: 9.460.800 m3

**2.** Grant n. 136. Granted volume: 15.768.000 m3

**3.** Grant n. 454/2016. Granted volume: 9.460.800 m3

its natural capacity, according to Portal Hidrológico [33].

The Act that instituted the National Policy of Hydric Resources has one chapter dedicated to the apparatus of billing water, discussing on its criteria, later regimented by the State Decree n. 32.032, on September 2, 2016. It confirms the prime goal of water bill, seen as an instrument of rationalization of water use.<sup>9</sup>

In Ceará, it is used as a model of billing water different from the billing used in other hydrographic basins. It is as follows:

*… it is characterized by its binomial form, grounded in its marginal cost of management of hydric resources and in its capability of payment of each category of consumer. […] However, in consequence of the necessity of structuration of the management authority, the universalization of grant, as well as a wider comprehension and acceptance of the consumers, the charging was implemented in a mononomial form, admitting taxes only defined by the water consumed. (Consumer tax)* [34]*.*

For the juridical doctrine, billing water is an instrument capable to promote sustainable development. Because of its character of public good of common use, it is affirmed that "the payment of the use does not imply in the creation of any kind of right on the water, as already observed, for being a public good, it is inalienable [35].

In the case of Ceará, the Decree that regiments the billing water presupposes different taxes for "enterprises considered as structuring for the State of Ceará" (Article 9, Decree n. 32.032/2016), which threatens the prime goals of the instituted bill.

The unsustainable water demand of the project caused the State of Ceará to approve, by law, the creation of the Emergency Water Charge, which burdened the water consumption of the thermals. In reaction to the measure, the two largest coal-fired thermals, Pecém I and II, contacted the National Electric Energy Agency (Aneel) stating that they would not be able to continue operating if the price adjustment of the energy tariff is not allowed, as a way of compensating the increase in water costs. The request was rejected by the Agency and later by the Judiciary.

The Contingency Tariff consists of an instrument authorized by State Law 16.103/2016, which created the Contingency Tariff for the use of water resources during a critical situation of scarcity. The norm was regulated by the Resolution of CONERH (Council of Water Resources of the State of Ceará) number 006/2016, providing that:

<sup>9</sup> The Decree defines the following criteria for the Industrial Water Bill: Article 3: The billing for the use of raw water in the domain of Ceará will vary according to the following categories of users, for surficial and underground collection: II – Industry: (a) The supply of water with complete collection and adduction by COGERH: T = 2.067 Reais and 59 Cents per 1000 m; (b) The supply of water with complete or partial collection and adduction by the user from water sources, such as reservoirs, rivers, lagoons, underground lakes and rivers or channels: T = 601 Reais and 03 Cents per 1000 m.

*Article 1. Establish the value of contingency tariff for the use of the water resources of the State of Ceará, in the industrial purpose, granted to thermoelectric companies Porto do Pecém Generation of Energy, MPX Pecem II Generation of Energy S/A and MPX Mining and Energia Ltda.*

is a tax of an extra-fiscal nature, which is a competence of all the states of the federation, subject to the principles of selectivity and essentiality, that is, to the regime of harmonious

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On the tax instruments, then, we must make some observations. The principle of selectivity consists of an instrument of state extrafiscality and includes a minimum selection of taxes, among them the ICMS, which was reduced as a financial contribution to the industries of the Pecém Complex. Extrafiscality consists in the use of instruments of the Tax Law whose primary purposes are not cash collection, but non-fiscal objectives, of stimulus or control to

On the other hand, the principle of selectivity establishes that, for goods of greater essentiality, the rate will be lower, and the inverse will occur for less essential (or harmful) goods. It applies to indirect taxes, that is, those that have repercussions on the final consumer, and still, a fiscal justice technique to foster the progressiveness of the tax system. It is expressly

Although subsection III, Paragraph 2 of Article 155, regarding the ICMS speaks of "may", the application of selectivity does not consist of a faculty. The correct and predominant interpretation is that the term "may" corresponds to a "must," as it is present in item I of Paragraph 3 of Article 153 of the Brazilian Federal Constitution of 1988, which establishes on the principle of selectivity also for the Industrialized Products Tax. Thus, there is no faculty, but mandatory in observance of the principle, this being the dominant understanding and that appears in the Proposal of Constitutional Reform Tax, in process in the National Congress. In RMS n° 28.227/ GO, from the report of the Minister Herman Benjamin, the Second Panel of the Superior Court of Justice unanimously decided that "there is no doubt that the state legislature can not simply disregard the norm set forth in Article 155, § 2°, III, of CF, because of the inherent appro-

It should be noted that the National Tax Code also enshrines the norm, stating in Article 48 that "The tax is selective according to the essentiality of the products.". Essentiality, which guides the application of tax selectivity, is not only a moral or ideological conception, but a real verification of the importance of a merchandise or service for tax justice. The possible tax favorability seeks facilitate access to essential products for a life with quality and dignity. This is why the state charges cigarettes and alcoholic beverages, for example, and exempts

protection of assets protected by the constitutional order.

certain behaviors and economic activities.

provided for in the constitutional text:

*Paragraph 3. The tax established in item IV:*

priateness of the expression "should be selective."

medicines, food and items essential to human dignity.

*I - will be selective, depending on the essentiality of the product;*

*§ 2. The tax provided in item II shall comply with the following:*

*III - may be selective, depending on the essentiality of goods and services;*

*Article 153:*

*Article 155:*

In its sole paragraph, it remains clear that "The contingency fee for the use of water resources differs from the tariff for the use of water resources because it is transitory, objective to cover the additional expenses arising from the Critical Situation of Water Scarcity and stimulate rational use".

That would be sufficient to ensure that there was no confusion between the legal instruments at issue. Thus, it should also be clarified that the Resolution established that:

*Article 2. The contingency tariff for the use of water resources applied to users established in the caput of Article 1 will have the value of R \$ 7210.00/1000 cubic meters.*

*Sole Paragraph. The amount indicated in the caput of this article will be added to the value of the collection fee for the use of water resources and applied to all the volume consumed.*

*Article 3. The value of the contingency fee for the use of resources provided for in this Resolution shall be charged for the duration of the Declaratory Act no. 01/2015/SRH, published in Official Gazette of October 7, 2015.*

The act to which Article 3 refers consists of a Statement of Critical Situation of Water Scarcity in the State of Ceará. According to Article 2, the Tariff will have the value of R \$ 7210.00 /1000 cubic meters. If the Tariff, which is eminently transitory, is no longer applied, the companies benefiting from State Law 14,920/2011 would pay half of the industrial tariff.

It should be noted that, despite the mitigation measure created with the Emergency Charge, the consumption of water by the thermals is not decreasing, nor has the volume granted been altered, revealing that the measure proves insufficient to guarantee the protection of human supply and that there must be a complete revision of the tariff economic instruments on a permanent and non-temporary basis.

That said, it is considered that economic compensation measures cannot be ignored to reduce water consumption and increase efficiency in economic activity, either because these companies tend to pass the costs of the tariff to the price of electricity or because costing and profitability remain in force, even though the economic sector is strained by passing on the increase in costs.

In this research, it is remarked that the subject does not approach exclusively to a discretionary politic decision, since the fundamentality of the Right to Water and the infra-constitutional regimenting of the hydric management institutions conditionate and design the discretionary margin of the state agencies.

The second legal regime that merits analysis concerns tax exemptions, according to the distinction made in the introduction of this research. In the present case, in addition to the reduction on the water tariff price, the State of Ceará also reduces taxes on the main inputs of the project, notably the tax called ICMS, Service and Goods Circulation Tax.

It occurs that taxes, a kind of tribute, instituted by law and regulated under a specific legal regime, are disciplined under their own norms and principles. In Brazilian systematics, ICMS is a tax of an extra-fiscal nature, which is a competence of all the states of the federation, subject to the principles of selectivity and essentiality, that is, to the regime of harmonious protection of assets protected by the constitutional order.

On the tax instruments, then, we must make some observations. The principle of selectivity consists of an instrument of state extrafiscality and includes a minimum selection of taxes, among them the ICMS, which was reduced as a financial contribution to the industries of the Pecém Complex. Extrafiscality consists in the use of instruments of the Tax Law whose primary purposes are not cash collection, but non-fiscal objectives, of stimulus or control to certain behaviors and economic activities.

On the other hand, the principle of selectivity establishes that, for goods of greater essentiality, the rate will be lower, and the inverse will occur for less essential (or harmful) goods. It applies to indirect taxes, that is, those that have repercussions on the final consumer, and still, a fiscal justice technique to foster the progressiveness of the tax system. It is expressly provided for in the constitutional text:

*Article 153: Paragraph 3. The tax established in item IV: I - will be selective, depending on the essentiality of the product; Article 155: § 2. The tax provided in item II shall comply with the following:*

*Article 1. Establish the value of contingency tariff for the use of the water resources of the State of Ceará, in the industrial purpose, granted to thermoelectric companies Porto do Pecém Generation of Energy,* 

In its sole paragraph, it remains clear that "The contingency fee for the use of water resources differs from the tariff for the use of water resources because it is transitory, objective to cover the additional expenses arising from the Critical Situation of Water Scarcity and stimulate

That would be sufficient to ensure that there was no confusion between the legal instruments

*Article 2. The contingency tariff for the use of water resources applied to users established in the caput* 

*Sole Paragraph. The amount indicated in the caput of this article will be added to the value of the collec-*

*Article 3. The value of the contingency fee for the use of resources provided for in this Resolution shall be charged for the duration of the Declaratory Act no. 01/2015/SRH, published in Official Gazette of* 

The act to which Article 3 refers consists of a Statement of Critical Situation of Water Scarcity in the State of Ceará. According to Article 2, the Tariff will have the value of R \$ 7210.00 /1000 cubic meters. If the Tariff, which is eminently transitory, is no longer applied, the companies

It should be noted that, despite the mitigation measure created with the Emergency Charge, the consumption of water by the thermals is not decreasing, nor has the volume granted been altered, revealing that the measure proves insufficient to guarantee the protection of human supply and that there must be a complete revision of the tariff economic instruments on a

That said, it is considered that economic compensation measures cannot be ignored to reduce water consumption and increase efficiency in economic activity, either because these companies tend to pass the costs of the tariff to the price of electricity or because costing and profitability remain in force, even though the economic sector is strained by passing on the increase in costs. In this research, it is remarked that the subject does not approach exclusively to a discretionary politic decision, since the fundamentality of the Right to Water and the infra-constitutional regimenting of the hydric management institutions conditionate and design the discretionary

The second legal regime that merits analysis concerns tax exemptions, according to the distinction made in the introduction of this research. In the present case, in addition to the reduction on the water tariff price, the State of Ceará also reduces taxes on the main inputs of the

It occurs that taxes, a kind of tribute, instituted by law and regulated under a specific legal regime, are disciplined under their own norms and principles. In Brazilian systematics, ICMS

project, notably the tax called ICMS, Service and Goods Circulation Tax.

*MPX Pecem II Generation of Energy S/A and MPX Mining and Energia Ltda.*

at issue. Thus, it should also be clarified that the Resolution established that:

*tion fee for the use of water resources and applied to all the volume consumed.*

benefiting from State Law 14,920/2011 would pay half of the industrial tariff.

*of Article 1 will have the value of R \$ 7210.00/1000 cubic meters.*

rational use".

150 Taxes and Taxation Trends

*October 7, 2015.*

permanent and non-temporary basis.

margin of the state agencies.

*III - may be selective, depending on the essentiality of goods and services;*

Although subsection III, Paragraph 2 of Article 155, regarding the ICMS speaks of "may", the application of selectivity does not consist of a faculty. The correct and predominant interpretation is that the term "may" corresponds to a "must," as it is present in item I of Paragraph 3 of Article 153 of the Brazilian Federal Constitution of 1988, which establishes on the principle of selectivity also for the Industrialized Products Tax. Thus, there is no faculty, but mandatory in observance of the principle, this being the dominant understanding and that appears in the Proposal of Constitutional Reform Tax, in process in the National Congress. In RMS n° 28.227/ GO, from the report of the Minister Herman Benjamin, the Second Panel of the Superior Court of Justice unanimously decided that "there is no doubt that the state legislature can not simply disregard the norm set forth in Article 155, § 2°, III, of CF, because of the inherent appropriateness of the expression "should be selective."

It should be noted that the National Tax Code also enshrines the norm, stating in Article 48 that "The tax is selective according to the essentiality of the products.". Essentiality, which guides the application of tax selectivity, is not only a moral or ideological conception, but a real verification of the importance of a merchandise or service for tax justice. The possible tax favorability seeks facilitate access to essential products for a life with quality and dignity. This is why the state charges cigarettes and alcoholic beverages, for example, and exempts medicines, food and items essential to human dignity.

It is also necessary to understand the relationship between essentiality, instruments of fiscal justice and the promotion of material equality. One of the elements that guides the extrafiscality has to be to ensure that those with greater capacity, expecially when they profit from economic activity whose nature involves risks and damage to the environment and health, deal with the tax burden. In the present case, large industries are benefiting from the fiscal renunciation of the State, with full tax capacity, making the rules that subsidize it even more incompatible with the legal system.

Finally, the principles that interest the debate concerning water should not exclude the principles of precaution and preventive actuation, which are founded in Principle 15, of the Declaration of Rio on Environment and Development, which Brazil signs. Paulo de Bessa Antunes [38] indicates that the principle of prevention should be applied when the possible impacts in the future are acknowledged, whereas the principle of precaution (or caution) should be applied when the probable impacts are uncertain or unknown. In both cases, when the impacts are known and in front of scientific indications for the scenario of climate change, the incentive to the intensive, prodigal and polluting use of environmental goods violates the

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Looking at the Constitution of the State of Ceará [39], it can be observed that its text presents regimenting apparatus and its normative content is deeply damaged by the public subsidies grant to the hydro-intensive enterprises of CIPP. In its Article 318, the constitutional text states that "the State and the Municipalities have the duty do preserve their waters and to promote its rational use." In the Article 326, it states that the administration should guarantee "the multiple use of hydric resources and the apportionment of cost of the respective works in the rule of law" (Article 326, II, C.E.) and "the protection of water against actions that might compromise its present or future use" (Article 326, III, C.E.). The duty to preserve the waters, promote their rational use, and priority for human use and animal watering, are guidelines

Thus, it can be also observed that the billing of use of hydric resources constitutes an indispensable instrument to the legality of the public management of water. This is not an option, or a discretionary act of the Administration, which can change depending on the individual to be disadvantaged. This is an administrative act fully linked to the law and its regimentations. Therefore, our understanding is that a total or partial exemption from the billing of the use of hydric resources, with no justification under proportionality and impersonality criteria, violates the normative constitutional order. In addition to that, it does not consider the dictates of the National Policy and the State Policy of Hydric Resources in their priority of water supplying to human individuals, also damaging the principles of proportionality, reasonability and isonomy. It happens because the economic sector has a rather differenced treatment with

Such considerations associated to the fatidic scenario and its severity should not be despised. In Ceará, the basin Gavião, which supplies water to the Metropolitan Zone of Fortaleza, with the Castanhão as the main reservoir in the state lands, is found in grievous situation. This reinforces the state of water shortage in Ceará and the necessity to take urgent decisions in hydric management, to guarantee the legal dictate that establishes the priority for water supplying for human individuals. It should also be highlighted that Castanhão had 4.94% of its water volume in February 2017. Currently, even after a rainfall period, the reservoirs in the state have 12.3% [40] of their capacity. On April 18, 2017, the State of Ceará declared Situation

Thus, the tax and tariff instruments must be managed in accordance with the constitutionally

normative protective mark of the environment.

no juridical justification.

defined environmental protection.

that can be observed in all legal systems in the country and state.

on Emergency in 168 of its municipalities for water shortage [41].

On the other hand, the data that indicate the annual liquid profit of the company EDP Energias do Brasil (Holder of Porto do Pecém Geração de Energia S/A – Pecém I) are relevant. It was 1265 billion Reais [36], making evident the economic capacity of the sector. It corroborates the thesis of the absence of reasonable and juridical justification and normatively based of the granted subsidies.

Synthesizing, the normative aim is to privilege the essential products for a good life, dignity, social justice, and not extremely polluting economic activities that have ample capacity to bear the regular tax burden. Therefore that is no reason to go against the increase of the final product, considering that the objective of the extra-fiscal standard is exactly discourage harmful behaviors to the community, such as the intensive and wasteful use of water, in addition to the environmental pollution caused by the thermoelectric company of the Pecém Complex.

Thus arises the reflection about the compatibility between, on one hand, the water tax reduction and subsides offered by the CIPP and, on another hand, the normative content of the constitutional principles that found the juridical order. Taking a look at the issue, the policy of subsidies with the effectiveness of the constitutional right to the balanced environment and the healthy quality of life, from which the democratic and regulated access of essential goods to guarantee human dignity, consonant with the theoretical contribution exposed in the previous items of the research.

The normative environmental discipline also deals with the protection of the hydric resources. *A priori*, it is important to remark water as a member constituent of the environment and include it in the words of the Article 225 of the Brazilian Constitution.

The constitutional embodiment of water and other rules characterizes the phenomenon denominated "Constitution of the Environment and Ecology of the Law" [37]. The normative analysis of the subject, presented in the initial chapters of this work, indicates an incongruence between the Right to Water and to Environment and the grant of tax subsidies for hydrointensive enterprises.

In addition to that, it is worth to mention that the Article 225 also emanates from other related principle, which finds technical terminologies differenced in the doctrine, such as "the Principle of Obligation of Intervention of the Public Force," in Machado. [22] Such intervention is oriented under the criteria of distributive justice, social equality and the maximal environmental tutelage. Therefore, the state intervention in the case of CIPP is a threat to this paradigm.

Finally, the principles that interest the debate concerning water should not exclude the principles of precaution and preventive actuation, which are founded in Principle 15, of the Declaration of Rio on Environment and Development, which Brazil signs. Paulo de Bessa Antunes [38] indicates that the principle of prevention should be applied when the possible impacts in the future are acknowledged, whereas the principle of precaution (or caution) should be applied when the probable impacts are uncertain or unknown. In both cases, when the impacts are known and in front of scientific indications for the scenario of climate change, the incentive to the intensive, prodigal and polluting use of environmental goods violates the normative protective mark of the environment.

It is also necessary to understand the relationship between essentiality, instruments of fiscal justice and the promotion of material equality. One of the elements that guides the extrafiscality has to be to ensure that those with greater capacity, expecially when they profit from economic activity whose nature involves risks and damage to the environment and health, deal with the tax burden. In the present case, large industries are benefiting from the fiscal renunciation of the State, with full tax capacity, making the rules that subsidize it even more

On the other hand, the data that indicate the annual liquid profit of the company EDP Energias do Brasil (Holder of Porto do Pecém Geração de Energia S/A – Pecém I) are relevant. It was 1265 billion Reais [36], making evident the economic capacity of the sector. It corroborates the thesis of the absence of reasonable and juridical justification and normatively based of the

Synthesizing, the normative aim is to privilege the essential products for a good life, dignity, social justice, and not extremely polluting economic activities that have ample capacity to bear the regular tax burden. Therefore that is no reason to go against the increase of the final product, considering that the objective of the extra-fiscal standard is exactly discourage harmful behaviors to the community, such as the intensive and wasteful use of water, in addition to the environmental pollution caused by the thermoelectric company of the Pecém

Thus arises the reflection about the compatibility between, on one hand, the water tax reduction and subsides offered by the CIPP and, on another hand, the normative content of the constitutional principles that found the juridical order. Taking a look at the issue, the policy of subsidies with the effectiveness of the constitutional right to the balanced environment and the healthy quality of life, from which the democratic and regulated access of essential goods to guarantee human dignity, consonant with the theoretical contribution exposed in the pre-

The normative environmental discipline also deals with the protection of the hydric resources. *A priori*, it is important to remark water as a member constituent of the environment and

The constitutional embodiment of water and other rules characterizes the phenomenon denominated "Constitution of the Environment and Ecology of the Law" [37]. The normative analysis of the subject, presented in the initial chapters of this work, indicates an incongruence between the Right to Water and to Environment and the grant of tax subsidies for hydro-

In addition to that, it is worth to mention that the Article 225 also emanates from other related principle, which finds technical terminologies differenced in the doctrine, such as "the Principle of Obligation of Intervention of the Public Force," in Machado. [22] Such intervention is oriented under the criteria of distributive justice, social equality and the maximal environmental tutelage. Therefore, the state intervention in the case of CIPP is a threat to this

include it in the words of the Article 225 of the Brazilian Constitution.

incompatible with the legal system.

granted subsidies.

152 Taxes and Taxation Trends

Complex.

vious items of the research.

intensive enterprises.

paradigm.

Looking at the Constitution of the State of Ceará [39], it can be observed that its text presents regimenting apparatus and its normative content is deeply damaged by the public subsidies grant to the hydro-intensive enterprises of CIPP. In its Article 318, the constitutional text states that "the State and the Municipalities have the duty do preserve their waters and to promote its rational use." In the Article 326, it states that the administration should guarantee "the multiple use of hydric resources and the apportionment of cost of the respective works in the rule of law" (Article 326, II, C.E.) and "the protection of water against actions that might compromise its present or future use" (Article 326, III, C.E.). The duty to preserve the waters, promote their rational use, and priority for human use and animal watering, are guidelines that can be observed in all legal systems in the country and state.

Thus, it can be also observed that the billing of use of hydric resources constitutes an indispensable instrument to the legality of the public management of water. This is not an option, or a discretionary act of the Administration, which can change depending on the individual to be disadvantaged. This is an administrative act fully linked to the law and its regimentations.

Therefore, our understanding is that a total or partial exemption from the billing of the use of hydric resources, with no justification under proportionality and impersonality criteria, violates the normative constitutional order. In addition to that, it does not consider the dictates of the National Policy and the State Policy of Hydric Resources in their priority of water supplying to human individuals, also damaging the principles of proportionality, reasonability and isonomy. It happens because the economic sector has a rather differenced treatment with no juridical justification.

Such considerations associated to the fatidic scenario and its severity should not be despised. In Ceará, the basin Gavião, which supplies water to the Metropolitan Zone of Fortaleza, with the Castanhão as the main reservoir in the state lands, is found in grievous situation. This reinforces the state of water shortage in Ceará and the necessity to take urgent decisions in hydric management, to guarantee the legal dictate that establishes the priority for water supplying for human individuals. It should also be highlighted that Castanhão had 4.94% of its water volume in February 2017. Currently, even after a rainfall period, the reservoirs in the state have 12.3% [40] of their capacity. On April 18, 2017, the State of Ceará declared Situation on Emergency in 168 of its municipalities for water shortage [41].

Thus, the tax and tariff instruments must be managed in accordance with the constitutionally defined environmental protection.
