One of the best examples of distortionary policy is the case of the Kandir Law (1996) and the ICMS tax. ICMS is a state-run, value-added tax that is incurred when production and utilization occur in different states. Resource flows occur at the state, not the national, level. As a result, interstate commerce and exports of value-added goods like soybean meal are discouraged, technology adoption is slowed, and the operating size of firms is reduced. The ICMS tax is