Gasoline will have a drop of R$ 1.55 per liter with tax cuts, says government

The MME (Ministry of Mines and Energy) calculates that the tax cuts approved by Congress should reduce the average price of gasoline in the country by R$ 1.55 per liter, compared to the record of R$ 7,390 reached the week before the validity of the measures.

In the first week of federal tax cuts, the average drop was R$ 0.26 per liter, according to the latest ANP (National Agency for Petroleum, Gas and Biofuels) price survey. The ICMS cut has been gradually applied by the states.

In relation to hydrated ethanol, the ministry expects an average cut of R$ 0.31 per liter. In the week prior to the approval of the measures, the liter of fuel cost, on average, R$ 4,873.

The MME accounts consider the reclassification of fuels as essential goods, which limits the ICMS rate to 17% or 18% and the exemption from federal taxes PIS/Cofins and Cide on gasoline and ethanol until December 31, 2022.

The measures are part of the federal government’s effort to curb inflation on the eve of elections and thus improve Bolsonaro’s popularity. The shortage of various items, such as fuel, is seen by members of the president’s campaign as the main obstacle to reelection.

The ICMS ceiling, however, is still debated in court by some states. Last Friday (6), Rio de Janeiro, Minas Gerais, Santa Catarina, Paraná, Rio Grande do Sul and Alagoas announced a reduction in the rate. Before, Sao Paulo, Goiás​, Espírito Santo and Rondônia had also confirmed cuts.

With the highest rates on gasoline before the ceiling was imposed, Rio de Janeiro de Minas Gerais has the greatest impacts estimated by the MME: R$ 1.94 and R$ 1.86 per liter, respectively. In São Paulo, the expected reduction is R$ 1.36 per liter.