Guedes rejects cutting gasoline tax, but agrees to reduce diesel ‘a little’

Minister Paulo Guedes (Economy) rejected this Tuesday (1st) the idea of ​​subsidizing gasoline prices, but agreed to reduce taxes “a little” on diesel.

He suggested that the transition to a more sustainable global economy and the process of joining the OECD (Organization for Economic Co-operation and Development) could go in the opposite direction of the idea of ​​a broad subsidy for automobile fuels.

“We are in transition to a green economy, to the digital OECD. Should we subsidize gasoline?”, he asked at a virtual event held by the Credit Suisse bank.

The OECD has included in the documents that formalize the beginning of negotiations for Brazil’s entry into the entity obligations to reduce deforestation and climate change mitigation measures provided for in the Paris agreement, as shown by the leaf.

There is resistance to the idea of ​​presenting a PEC (proposed amendment to the Constitution) to stop the acceleration of fuel prices and Guedes tries to limit the scope of the measure. This Monday (31), President Jair Bolsonaro (PL) said that the government gave up on sending a PEC on the subject and that the solution must come from Congress itself.

Guedes said that the PEC is being studied and that tax cuts are being analyzed with moderation. According to him, it is possible to reduce taxes on diesel “for Brazil to run better”.

“We raised around R$ 17 billion, R$ 18 billion a year with diesel. We could reduce a little of that”, he said.

In the PEC discussions, allowing governors to reduce the state ICMS tax on fuel was also analyzed. But Guedes sought to distance himself from the matter, saying that the tax change is a discussion for Congress.

“If there is an initiative by Congress, this is a political problem. If they want to limit the incidence of ICMS, transform from ad valorem [com base no valor cobrado nas bombas] for ad rem [valor fixo por litro]and limiting it to 25% or 20%, it’s a political problem, I don’t get into that discussion,” he said.

Guedes was asked about the idea of ​​eliminating the IPI (Tax on Industrialized Products), present in the tax reform plan prepared by him. Without directly mentioning the tribute, he said that several taxes will one day be merged into a new model.

The minister defended that the collection is growing permanently and that this increase should not be left in the hands of the “obese State”, even mentioning that a “tax ceiling” would be welcome.

“It is welcome, instead of talking only about a ceiling on spending, to think about a tax ceiling. I am a liberal. Taxes must have limits. The population cannot be abused by tax as it is in Brazil,” he said.

The minister took the opportunity to defend the government and said that the transition to a more liberal economy has not yet been completed, mentioning that there is opposition to it even within the government. “A second term is to continue this transition. We are in an incomplete transition,” he said.

“We have difficulty implementing privatizations, despite the president having 60 million votes [nas eleições de 2018] and having committed to the liberal program. Sometimes the opposition is within the government, there are people who have not understood that this transition needs to be made,” he said.

For Guedes, in a possible second term, it is necessary to go back to seeking measures such as the release and untying of the public budget, a proposal that was sent to Congress but not implemented in the way imagined by the minister.

The world’s central banks continue to sleep at the wheel with inflation, he said, while Brazil has already raised interest rates to contain the rise in prices. For Guedes, this factor, combined with the rains in recent months, should contribute to the scenario. His prediction is that the red flags on the energy bill will be removed soon.