Haddad does not rule out extending the fuel cut and talks about pacifying the country

The Minister of Finance, Fernando Haddad (PT), did not rule out this Thursday (12) the possibility of the government extending the exemptions on fuel. He said that the issue will be studied by President Luiz Inácio Lula da Silva (PT) and linked the decision to a need to pacify the country.

On January 1, Lula edited an MP (provisional measure) that extended the zero rate of PIS/Cofins on diesel and cooking gas for 12 months and on gasoline and ethanol for 60 days. The measure was originally adopted by former President Jair Bolsonaro (PL) and would end at the end of 2022.

“This does not prevent the president from reassessing these deadlines, depending on the political assessment he makes, which requires continuing on a course of pacifying this country, and also in relation to these conversations that we are going to have with the monetary authority [Banco Central]in light of the letter she sent to justify [o estouro da meta de inflação em 2022]”, Haddad said at a press conference.

The declarations about pacifying the country come in the same week as the coup attacks made by Bolsonarists in Brasília.

The open letter from BC president Roberto Campos Neto was released on Wednesday (11). In the document, he says that the possible re-encumbrance of fuels should contribute to keeping inflation above the target in 2023, after non-compliance last year.

“We want to understand exactly the meaning of what the monetary authority is considering in this matter”, stated Haddad, indicating that this may be a relevant factor in the government’s decision on maintaining or not the exemption of federal taxes.

The new government has criticized the high level of interest and intends, with the package to improve the picture of public accounts, to open the way for the BC to reduce the tightening in rates. The Selic today is at 13.75% per annum.

The extension of the exemption on fuels for a longer period of time already had supporters in the political wing of the government. The economic team, in turn, acted to restrict the scope of the measure.

The Treasury calculates an extra collection of R$ 28.9 billion with the reinstatement of federal taxes on gasoline and ethanol as of March.

If the exemption is extended, a portion of this revenue forecast will be frustrated, reducing part of the power of the package presented by the minister.

The minister himself acknowledged that there are still no guarantees that the reversal of the benefit will take place within the foreseen period. “This decision will only be taken when we have [o novo presidente] ahead of Petrobras and at the right time. It’s on the spreadsheet because that’s what the law is now predicting,” said Haddad.