170
T. L. Cruz
2010). The Constitution of Ecuador acknowledges Planet Earth as a subject of law,
having the same importance as human beings (Gudynas 2014). The Constitution of
Brazil (Brasil 1988a, b) commits the government to ensure social fairness, justice
and development (article 3), while protecting the environment and using rationally its
resources (articles 170 and 225) under a balanced, fair and well-structured financial
system (art. 192).
Economy influences the use of natural resources in industry and foreign trade,
and the standards of living in countries and states. Therefore, Marino emphasizes
that all resources should be used sustainably, including the economic ones. The
finite resources of the treasury should be used responsibly to produce positive net
income and cash flows, thus ensuring the health of the public finance system and
improvements to local quality of life (IMF 2002; Scaff 2014).
However, the effective establishment of sustainable long-term financial planning
by decision-makers can be made difficult due to political and technical issues, especially in developing countries, where financial irregularities are common. In fact,
Allen and Koshima (2018) noted that higher-income countries have lower levels of
financial irregularities than low-income nations, what can be attributed to their more
complex and robust financial reporting systems and budget execution. Although
financial irregularities may include corrupt practices, Allen and Koshima (2018)
emphasize the theme is broader and may involve budget management irregularities,
such as payments and expenditures that violate financial regulations, exceed budget
appropriation or are used for unauthorized purposes.
Thus, it should be a priority to strengthen financial sustainability and combat
irregularities in countries and municipalities that rely on the exploration of nonrenewable resources such as mining. Once the industrial exploration is over, so will
be the taxes collection and the government shall need to find new sources of economic
profit (Scaff 2014). In Brazil, there are specific laws that rule the use of mining
taxation to promote sustainable economic growth, social responsibility and economic
diversification (Cruz et al. 2019).
The Constitution of Brazil (Brasil 1988a, b) assures that municipalities, states and
the federation shall benefit economically from the exploration of minerals and ores
in their territories (article 20, 1st §). The Financial Compensation for Exploration
of Mineral Resources (CFEM) is a tax that mining companies ought to pay to the
Federation, states and municipalities that produce and are somehow affected by
mining production. It was created by the Law 7990/1989. The Law 13,540/2017
defined the calculation bases, rates and percentages of tax distribution according to
mineral substances and federative entities, based on the gross revenue (Tables 1 and
2).
The Law 13,540/2017 also recommends that federative entities should invest 20%
of the CFEM in economic diversification, sustainable development and scientific and
technological development projects, to reduce excessive economic dependence on
mining activities (Enríquez 2018). The article 8th of the Law 7990/1989 and the
article 26 of the Federal Decree 01/1991 strictly forbids the use of CFEM to pay
public management debts, common expenses and human resources, as long as they
T. L. Cruz
2010). The Constitution of Ecuador acknowledges Planet Earth as a subject of law,
having the same importance as human beings (Gudynas 2014). The Constitution of
Brazil (Brasil 1988a, b) commits the government to ensure social fairness, justice
and development (article 3), while protecting the environment and using rationally its
resources (articles 170 and 225) under a balanced, fair and well-structured financial
system (art. 192).
Economy influences the use of natural resources in industry and foreign trade,
and the standards of living in countries and states. Therefore, Marino emphasizes
that all resources should be used sustainably, including the economic ones. The
finite resources of the treasury should be used responsibly to produce positive net
income and cash flows, thus ensuring the health of the public finance system and
improvements to local quality of life (IMF 2002; Scaff 2014).
However, the effective establishment of sustainable long-term financial planning
by decision-makers can be made difficult due to political and technical issues, especially in developing countries, where financial irregularities are common. In fact,
Allen and Koshima (2018) noted that higher-income countries have lower levels of
financial irregularities than low-income nations, what can be attributed to their more
complex and robust financial reporting systems and budget execution. Although
financial irregularities may include corrupt practices, Allen and Koshima (2018)
emphasize the theme is broader and may involve budget management irregularities,
such as payments and expenditures that violate financial regulations, exceed budget
appropriation or are used for unauthorized purposes.
Thus, it should be a priority to strengthen financial sustainability and combat
irregularities in countries and municipalities that rely on the exploration of nonrenewable resources such as mining. Once the industrial exploration is over, so will
be the taxes collection and the government shall need to find new sources of economic
profit (Scaff 2014). In Brazil, there are specific laws that rule the use of mining
taxation to promote sustainable economic growth, social responsibility and economic
diversification (Cruz et al. 2019).
The Constitution of Brazil (Brasil 1988a, b) assures that municipalities, states and
the federation shall benefit economically from the exploration of minerals and ores
in their territories (article 20, 1st §). The Financial Compensation for Exploration
of Mineral Resources (CFEM) is a tax that mining companies ought to pay to the
Federation, states and municipalities that produce and are somehow affected by
mining production. It was created by the Law 7990/1989. The Law 13,540/2017
defined the calculation bases, rates and percentages of tax distribution according to
mineral substances and federative entities, based on the gross revenue (Tables 1 and
2).
The Law 13,540/2017 also recommends that federative entities should invest 20%
of the CFEM in economic diversification, sustainable development and scientific and
technological development projects, to reduce excessive economic dependence on
mining activities (Enríquez 2018). The article 8th of the Law 7990/1989 and the
article 26 of the Federal Decree 01/1991 strictly forbids the use of CFEM to pay
public management debts, common expenses and human resources, as long as they