Senate approves basic text of project that limits ICMS on fuels

The Senate approved this Monday (13) the basic text of the complementary bill that establishes a ceiling for ICMS (Tax on the Circulation of Goods and Services) on fuel, energy, telecommunications and transport.

The vote is a defeat for the governors, who sought to articulate deeper changes to the text that had come from the Chamber of Deputies, arguing that the drop in revenue could cause problems.

On the other hand, it is a victory for the group led by the president of the Chamber of Deputies, Arthur Lira (PP-AL), and by the government of President Jair Bolsonaro (PL), which has been waging war with state governments and attributing responsibility to the states. by rising fuel prices.

The estimate of the rapporteur of the proposal in the Senate, Fernando Bezerra Coelho (MDB-PE), is that the approval of the complementary bill and of two other PECs (Proposals for Amendments to the Constitution) that deal with fuels, still without a date of voting, can cause a drop in the price of a liter of gasoline by R$ 1.65 and by R$ 0.76 per liter of diesel.

The basic text of the complementary bill was approved by 65 votes in favor and 12 against – 41 votes were needed. As there were changes, the proposal needs to go through a new vote in the Chamber of Deputies.

The analysis of five highlights presented by some benches is still pending, which will be voted on separately.

The ruling party voted in favor of the proposal. PT senators and some MDB parliamentarians voted against it. One of the few members of the opposition who spoke out favorably was the leader of the opposition, Randolfe Rodrigues (Rede-AP)

The so-called PLP 18 considers fuel, energy, telecommunications and transport as essential items and, thus, establishes that ICMS rates on these items cannot exceed 17% or 18%.

The proposal hits the states hard. Some of them, like Rio de Janeiro, have a 34% rate for these goods and services and will be forced to reduce it by half.

The project was approved by the Chamber of Deputies at the end of May, under strong protests from governors, who sought to reverse the main points during the Senate – legislative house closest to the states.

However, Bezerra, rapporteur of the proposal in the Senate, maintained the backbone of the text that had been approved in the Chamber. For example, the device that determines that the new ceiling comes into force after the project is sanctioned, while the governors wanted a “modulation” remained.

The proposal approved by the deputies included compensation to states in case of loss of revenue. A trigger was foreseen that would be triggered to determine the compensation when the loss of collection exceeds 5%.

Bezerra changed the text to determine that the trigger will be activated when there is a variation greater than 5% only in the collection with fuel, energy, telecommunications and transport. In addition, moments before the vote, the senator adopted another amendment determining that the variation of inflation will also be considered to determine the percentage of drop in revenue. The amendment benefits the states.

The compensation provided for by the text of the Chamber provided for the abatement of debts that states maintain with the Union. In a small concession to the states, Bezerra made compensation more immediate.

When the trigger is triggered, states that have debts with the Union will be able to deduct the amounts of debt installments paid monthly. Before, the proposal was to write off the stock, with no guarantee of immediate relief in the cashier.

Another amendment provides for the inclusion of mechanisms to compensate states that have losses greater than 5%, but do not have debts with the Union. In 2023, they will receive part of the federal government’s share of the CFEM (Financial Compensation for the Exploration of Mineral Resources). The rapporteur said that five states can fall into this situation, and the impact will be up to R$ 3 billion.

This group will also have priority in obtaining new loans from banks and other institutions.

The text also contains the measures that had been announced by Bolsonaro to contain the price of fuel, at a time of high inflation and when the president is seeking reelection. The reduction to zero of the Cide-Combustíveis, PIS and Cofins rates levied on gasoline until December 31, 2022. These measures will represent a tax waiver by the federal government of R$ 17 billion.

The rapporteur backtracked on his intentions to extend until June 30, 2027 the zero rate of federal taxes for hydrated alcohol fuel and on anhydrous alcohol added to gasoline. The rule will only be valid until the end of this year. Bezerra said that issues related to ethanol will be discussed in the PEC (Proposed Amendment to the Constitution) that will address the issue.

Bezerra also accepted an amendment to zero federal taxes on the commercialization of the production of independent refineries on LPG, natural gas and diesel oil.

The rapporteur also accepted changes to ensure that the current proportion of transfers to Fundeb compensation and health floor is maintained. In this case, the new wording makes it clear that the compensation resources must be transferred to health and education in the same percentages foreseen for the collection of ICMS.

On the other hand, an amendment, authored by Senator Alexandre Silveira (PSD-MG), very close to Pacheco, was rejected, which provided that the Union would fully compensate the states for the loss of revenue for a period of four years. The funds for this purpose would come from oil royalties.

Rapporteur rejects amendments that provided for gasoline aid to categories

Bezerra also rejected amendments by the senators that could provoke a “fiscal bomb”. An amendment by the leader of the MDB, Eduardo Braga (AM), provided, for example, the payment of a gasoline allowance for autonomous drivers of individual transport, such as taxi drivers and application drivers, of R$ 300. Motorcyclists would receive R$ 100. The aid would have a limit of R$ 3 billion. per annum.

In addition to PLP 18, the Senate must analyze in the coming days a PEC that provides for the transfer of up to R$ 29.6 billion to states that decide to zero their fuel rates. Last week, Bezerra estimated that the entire package of proposals related to fuels could cause a drop in the price of a liter of gasoline by R$ 1.65 and by R$ 0.76 in a liter of diesel.

The session in which the proposal was voted on was marked by the opposition of senators from several benches. Many pointed out that the real objective of the proposal would only be to avoid criticism of President Bolsonaro for the rise in prices, at a time when he is seeking re-election. Senate President Rodrigo Pacheco (PSD-MG) refused requests that the vote on the proposal be postponed.

“If we had called on state governments to do what I’m saying [negociar], I have no doubt that we would have obtained a gasoline subsidy for those who actually need it and not for those who do not need it, and we would have made a diesel subsidy for everyone, because diesel oil really interests everyone, and expanded the cooking gas subsidy for CadÚnico. Are we going to subsidize gas for the rich? What is the logic of this?”, asks Senator Marcelo Castro (MDB-PI).

“Why are we going to regulate this in an election year? I ask here: if this year were not an election year, would we be dealing with PLN 18 here? I want to believe that it is not”, he adds.

Realizing that the proposal would be voted on, despite the opposition, Senator Jorge Kajuru (Podemos-GO) used a phrase that provoked the reaction of all the women, who asked for his retraction.

“If this cannot be accepted [adiar votação]let us open the panel [de votação] and remember that phrase: ‘Faced with rape, relax and enjoy.'”, said the parliamentarian.