Government throws decision on fuel taxes to Congress

President Jair Bolsonaro (PL) said this Monday (31) that the government has given up on sending a PEC (proposed constitutional amendment) to Congress to reduce fuel taxes. The solution, he said, must come from Parliament itself.

The government had already been dehydrating the proposal since its initial presentation two weeks ago, mainly due to internal resistance. First, it gave up on creating a fund to stabilize prices, then it limited the benefits of PEC to diesel.

Now, Bolsonaro said, “Parliament must present a proposal allowing federal and state governments to reduce or even zero taxes on diesel and cooking gas.” If Congress gives this option, he added, the government will zero PIS/Cofins on diesel.

The tax today costs the consumer R$ 0.33 per liter. The federal government had already zeroed the Cide (Contribution for Intervention in the Economic Domain) on diesel in 2018. If the PIS/Cofins is zeroed, there is no more revenue from the sale of fuel.

Bolsonaro zeroed federal taxes on bottled gas in 2020, so a Congressional PEC would have no effect on federal revenue. It would be a way to pressure states to forgo revenue.

In two events in Rio, Bolsonaro blamed the PT governments for high fuel prices, saying that Petrobras’ trade policy is aimed at reducing the high indebtedness left by the company by previous administrations.

“Some think it can’t get any worse, gasoline at R$7, diesel over R$5, energy…”, commented the president, saying that the situation in Brazil is more comfortable than in other countries, such as the Europeans. .

“Does anyone think that if the thief returns here, he will return gasoline to R$3? He has already done it in the past, which increased your indebtedness,” he said, addressing an audience made up of Petrobras employees in the morning. .

The rise in fuel prices generates great concern in the government on the eve of Bolsonaro’s re-election race. In the last week, the liter of gasoline exceeded the symbolic value of R$ 8 in Angra dos Reis, on the south coast of Rio de Janeiro.

In the national average, the value is lower, R$ 6,664, but remains at the highest levels in history, pressured by the recovery of international oil prices and the devalued real.

For market experts, the trend is for further increases, as the lag in relation to international quotations remains high, even with the dollar showing signs of falling in recent days.