Flávio Bolsonaro signs PEC seen as kamikaze by Guedes’ team

The PEC (proposed amendment to the Constitution) of fuels called kamikaze by the team of Minister Paulo Guedes (Economy), for putting public accounts at risk, won the signature of Senator Flávio Bolsonaro (PL-RJ), son of President Jair Bolsonaro. (PL).

Flávio requested this Monday (7th) his inclusion as a signatory of the proposal by Senator Carlos Fávaro (PSD-MT), which seeks to contain the rise in fuel prices. The issue worries the government in an election year.

The president’s son should be Bolsonaro’s campaign coordinator for another term at Palácio do Planalto.

The president appears in second place in polls, behind former president Luiz Inácio Lula da Silva (PT), who has attacked Petrobras’ pricing policy, which tracks international prices for a barrel of oil and the dollar.

By including his signature, Flávio supports the PEC in the Federal Senate.

The economic team, in turn, rejects the proposal and says that it could have an impact of more than R$100 billion. That’s why it won, among the technicians, the seal of “PEC kamikaze” or “PEC of fiscal irresponsibility”.

as showed the leaf, within the government itself there was already a division, in which different members of the political wing supported different proposals. At least three ministers support the Senate’s PEC. In the view of Guedes’ team, the initiative can “set the economy on fire”.

The text allows the Union, states and municipalities to reduce taxes on the prices of diesel, biodiesel, gas and electricity in the years 2022 and 2023, without the need to compensate for the loss of revenue.

The proposal also authorizes the Union to create, in 2022 and 2023, a diesel aid of up to R$1,200 per month for self-employed truck drivers.

Another device opens the way for the expansion of the gas allowance, currently paid to 5.5 million families in extreme poverty. According to the author of the PEC, the subsidy currently at 50% of the value of the cylinder could rise to 100%.

Within the government, there are also advocates of extending the scope of the gas allowance to all 17.5 million families benefiting from Auxílio Brasil, a social program that replaced Bolsa Família – a brand of PT administrations.

The text also authorizes the transfer of up to R$ 5 billion to city halls to subsidize the gratuity of the elderly and avoid a tariff on urban bus lines in the middle of an election year.

Expenditures would be carried out outside the scope of the spending ceiling, the rule that limits expenditures to the variation of inflation and is now considered the anchor of the government’s fiscal policy.

The proposal is much broader than the PEC of the Chamber, which is restricted to the exemption of taxes on fuels. Even so, the impact of this other text would be between R$54 billion and R$75 billion, according to internal government calculations.

The Chamber’s PEC has the support of another wing of the government and was written within the Civil House, which also displeased Guedes’ team.

Sources from the economic team avoided making further comments on Flávio’s request to include his signature in support of the PEC processing.

The proposal had already reached the 27 signatures needed to advance in the Senate, which means that new support is optional. So far, the text has 31 signatures, counting that of the author.

To be approved, a PEC needs to be approved in two rounds by 49 senators and 308 deputies.

For Guedes’ team, the eventual approval of the Senate proposal could generate a kamikaze effect, due to the deterioration of the fiscal scenario caused by revenue waivers and additional expenditures.

The perception of a worsening would lead to an increase in the dollar and interest rates, which directly influences the price of fuel – virtually nullifying all the expected benefit with the measure.

In this scenario, there would only be the invoice to be paid by the Union, which without the benefits should already record a deficit of R$ 79.3 billion this year.

In addition to Flávio’s signature, the Senate’s PEC had as its second signatory Senator Alexandre Silveira (PSD-MG), who, even before taking office, participated in meetings on the fuel issue at the Planalto Palace.

Silveira was the main candidate to present the text and was even invited to assume the leadership of the government in Congress. But, after declining the Planalto proposal, he also ceased to be the favorite to file the PEC drafted by the government. He could still be the draftsman of the proposal.