Opinion – Vinicius Torres Freire: Centão wants to make more debt to lower diesel tax and electricity bill

The House of Representatives is about to approve a federal subsidy for fuel consumption, electricity, communications and transportation. That is, it wants to make the federal government pay part of the cost of consumption of these goods and services.

How? Forcing the federal government to pay for part of the losses that states and municipalities will have with the reduction of ICMS on these goods and services (according to the project being processed in the Chamber).

And?

Isn’t inflation very high? Yes.

Does the federal government have the money to pay for this subsidy? Not. If you don’t cut other expenses (which you won’t), you will be forced to take out more loans to fund this account, this loss of state revenue. That is, it will make more debt, at the cost of more interest of more than 13% per year.

The bill will show up somewhere, in the country’s financial debt and discredit. As will appear, sooner or later, in the finances of states and municipalities.

In short, it is the account of the reelection attempt of Jair Bolsonaro and his friends from the center. They reduce taxes, increase the leak in federal accounts, etc. After the election comes the roll. How many times have we seen this movie? It’s called “Electoral Fraud”. It’s actually a series.

The Chamber wants to lower the ICMS that states charge on fuel, electricity, communications and transport. A bill requires these goods and services to be classified as “essential”. That is, they cannot have an ICMS rate higher than the standard (“modal”) rate for each state, which is 17% or 18%.

The states complained that they would lose BRL 64.2 billion. By table, the cities would also lose, because part of the ICMS revenue is passed on to the municipalities.

In order not to lose money, the states came up with this idea of ​​”splitting” the painful one with the federal government.

If this account of losses of the National Committee of Secretaries of Finance of the States and the Federal District (Comsefaz) is correct, the federal government must have to pay for losses of some R$ 27 billion per year.

The Bolsa Família cost about R$34 billion a year. Auxílio Brasil is expected to pay around R$89 billion this year.

The Economy Ministry had been saying it didn’t want the federal fuel subsidy. He said it would have a small effect and cost a lot. Now, the House can pass a subsidy for diesel, gasoline, electric power, communications and transportation.

The subsidy went out one door, came in the other. He took this tour with the encouragement of the federal government itself. Paulo Guedes and the gang have been saying that the government has “excess revenue”. Therefore, he wanted to “give resources back to society”.

The government had more revenue than expected. But, even so, it spends more than it collects (even discounting the debt interest expense. In other words, it has a primary deficit). So, by reducing taxes, you are not returning anything. You’re taking on more debt.

If passed, the law should have some temporary effect on prices, although part of that discount, that tax reduction, could be appropriated by someone in the business chain, at least in the case of fuel.

The subsidy applies to everyone, whether rich, wealthy or poor. In other words, debt will be incurred in order to lower the electricity or gasoline bills of the richest, among other problems. To make matters worse, part of the subsidies, at least, will benefit the richest, since in many cases the poorest pay social tariffs.

Besides, who gains from government interest? The richest, who have money to lend to the government.