Opinion – Vinicius Torres Freire: Bolsonaro’s fuel plan costs more than Auxílio Brasil

Jair Bolsonaro-Centrão’s fuel package has neither foot nor head. It looks like an idea written down on a paper napkin dirty with condensed milk and farofa. All things considered, it is noted that it will cost more than some larger federal government programs. It could trigger inflation and more debt next year after the election.

It’s typical electoral fraud. If the trick doesn’t work, Bolsonaro may try to blame someone, in the states, for his irresponsible method of misgoverning.

Suppose the tax breaks on gasoline, ethanol, diesel and cooking gas last from July to December. The revenue reduction would be around R$ 48.6 billion in one semester. In one year, of R$ 92.2 billion (consumption in the halves of the year is different).

Emergency Aid, which provides food for 18 million families, costs R$ 89 billion a year.

The BPC (Benefício de Prestação Continuada), aid paid to the elderly and very poor people with disabilities, costs R$ 71.7 billion per year. Unemployment insurance takes R$ 38.8 billion annually. Federal investment in “works” takes R$ 43 billion.

The money from the fuel tax rebate is, so to speak, indiscriminate. Rich and poor, everyone who pays fuel or fuel-influenced prices benefits (the richest more than the poor). Do you think this is correct?

Suppose the price of fuel doesn’t go down until December 31st (if it doesn’t go up further). The next government will then have to extend the tax rebate, taking on even more debt and paying even more interest (for the rich). As a result, interest rates and the dollar tend to get saltier, everything else being constant.

If you don’t extend the tax rebate, inflation will jump, maybe enough to put inflation above the target in 2023. More interest.

Some countries are giving aid to alleviate this crisis. But, giving money, why not benefit the poor? By the way, governments in Brazil have had extra income because of the famine, but: 1) This won’t last; 2) There is no money left: the federal government is already in deficit.

If it happens, the tax discount would be R$ 24 billion until the first round, R$ 32 billion until a second round. So the economy can heat up (or stop cooling down) a little bit). This may give some impetus to inflation for items other than fuel.

If diesel consumption increases, given the lower price, the risks of running out of fuel increase, which is still unlikely.

It may be that not all tax rebates reach the consumer. The difference can get in the way, with some company (from the fuel business or others).

This tax revenue loss account is purely accounting (what is not collected, given the tax rate reduction and current revenue). As there must be an increase in consumption, part of the tax returns, who knows how much. The economic side effects remain.

This half-yearly revenue loss account of R$ 48.6 billion includes the discount on federal taxes on gasoline and ethanol (R$ 18.3 billion) and the money that the federal government promises to return to the states if they reduce the (possible ) new ICMS on diesel and cooking gas, in addition to state losses with the possible reduction to 17% or 18% of the current ICMS rates on these fuels (R$ 30.3 billion).

The plan is socially unfair, creates economic distortion, is an inefficient economic stimulus, bananas and pushes a big problem to after the election. For a change, Bolsonaro was negligent, inept and laborphobic. Now, he tries an electoral fraud.