The risk of rising fuel ICMS weighed on the decision to partially refund federal taxes

State finance secretaries will meet to discuss a tax rate increase

The prospect of increasing ICMS extension on fuels by states was factored into the president’s decision Luiz Inácio Lula da Silva carry out the partial reabsorption of federal taxes on the Gas and the ethanol. The measure was combined with the price reduction for Petrobras and the taxation of crude oil exports.

The next 8 states’ finance secretaries will meet to address ICMS taxation on the matter combustible. The possibility of raising the state fee is real and the Lula government held talks with states on the matter in the midst of negotiations on the Union’s compensation for losses under the ICMS reduction adopted last year.

If the federal government returned with the full rate of R$0.69 for gasoline, the tax increase could reach almost R$1 per liter in a scenario of increasing state taxes. In this case the impact on the final price and on inflation would be greater.

Today, the ICMS rate is around R$ 0.92 per liter in the weighted average of the states according to the value of the National Petroleum Agency (ANP) and can reach R$ 1.20, depending on the technical discussions that the states are having. week. At the meeting on the 8th the financial secretaries will seek convergence.

Lula decided not to redo it completely and raised the petrol fare to R$0.47. The alternative of the gradual restoration of taxation, anticipated by d Stadium last week, it was the baseline scenario that was on the negotiating table at the Palácio Planalto, despite pressure from PT president Gleisi Hoffmann to maintain the full exemption.

The model approved by the president provided for a better distribution of the impact of the tax relief along the production chain in order to mitigate its effect on the consumer. Government ministers, who participated in the final decision, reject the idea that taxing exports of crude oil is a copy of the Argentine model that taxes exports abroad. This criticism is used by the opposition.

The argument of the Brazilian government is that this is not a measure to solve the supply problem in the internal market, in addition to being temporary with a validity period of four months.

PM deadline

The four-month period for export taxation has been tailor-made for the duration of the Provisional Measure (MP), an instrument that has the force of law because it is valid from the moment it is drawn up.

An MP is valid for 60 days, renewable once for the same period. Just the duration of the MP. Other MPs are already queuing to vote. During this period, the government collects the planned R$ 6.6 billion, without having to change the deputy. Since the export tax is regulatory, there is no deadline for the measure to take effect.

The assessment considered in the decision by the president and the ministers was that oil companies have a lower tax burden on the exploration of very productive areas, especially those in the pre-saline layer, at a time when they are still benefiting from the extraordinary profit deriving from increase in the price of a barrel, currently around 80 US dollars. The government burdens this profitability, as other countries have.

With taxation, the government has shifted some of the tax burden from consumers to businesses. The calculation was that the consumer will pay less and the Ministry of Finance will not lose resources that should have been received until the end of the year. Together, the partial reabsorption of fuels and the taxation of oil exports should guarantee R$28.9 billion more this year.

Source: Terra

Rose

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