Government seeks alternative to PECs and considers including cuts in diesel in bill

The Jair Bolsonaro (PL) administration is now considering the possibility of including the authorization to reduce taxes on diesel in a complementary bill already being processed in the Senate, according to government officials heard by the Senate. leaf.

The solution would be a way out in the face of obstacles to the advancement of PECs (proposed amendments to the Constitution) filed in the Chamber and Senate that propose the reduction of taxes on fuels, among other measures. The different texts generated disputes in the government and in Congress.

The final decision still depends on the analysis of studies that were commissioned, in the government and in Congress, to verify the legal feasibility of this path.

The main concern is to shield Bolsonaro in the year he will seek re-election. The electoral law prohibits the granting of new benefits in the year in which the election is held.

There is also in the political field the consideration of how to build the agreement around this bill between the House and Senate. The government is considering the inclusion of diesel exemption, but there is concern that senators want to expand the scope of the benefit.

The concentration of efforts on the project has already been defended by the Minister of Economy, Paulo Guedes, and by the president of the Chamber, Arthur Lira (PP-AL).

“We should focus on the text of PLP 11, which the Chamber voted and is in the Senate, so that we can modulate the freezing of ICMS prices at a value that is fair for the population,” Lira told leaf this Tuesday (8).

Also on Tuesday, Senate President Rodrigo Pacheco (PSD-MG) signaled that the approval of a PEC might not be necessary, depending on adjustments to the text of the bill.

Pacheco stated that a meeting between the project’s rapporteur, Senator Jean Paul Prates (PT-RN), and members of the economic team was held to discuss details. Interlocutors from the Ministry of Economy confirmed the conversations, on condition of anonymity.

The possibility of changing the strategy to deliver the reduction in fuel taxes desired by Bolsonaro comes after the government itself split between two different proposals in Congress.

The PEC of the Chamber, presented by deputy Christino Áureo (PP-RJ), but which was written in the Civil House, has not yet gathered the 171 signatures necessary to move forward.

The Senate proposal, filed by Senator Carlos Fávaro (PSD-MT) and dubbed “PEC kamikaze” by the economic team, has so far added 32 signatures (27 were needed). She received the endorsement of Senator Flávio Bolsonaro (PL-RJ), son of the president and government leaders, in addition to having the support of ministers from the political wing.

In addition to relieving taxes, the senators’ proposal increases expenses with gas assistance, subsidies for bus fares and creates a diesel assistance for truck drivers. Guedes’ team calculates an impact of more than BRL 100 billion.

The Central Bank itself gave a strong message warning that the approval of short-term measures to reduce fuel prices could actually have the opposite effect, boosting exchange rates and inflation.

In the face of resistance and no consensus around the texts of the two PECs, government members believe that the best way may be to focus efforts on the project that deals with changing the collection of ICMS (Tax on the Circulation of Goods and Services) on fuels.

The project provides for a fixed charge of ICMS per liter of fuel, whose ceiling would be the value obtained from the current rate over the average price of the two previous years.

The idea now is to include in the text the possibility for the Union to exempt taxes on diesel without the need for compensation required by the LRF (Fiscal Responsibility Law). This would be possible because the LRF is also a complementary law.

The diesel tax exemption has a significantly lower cost, around R$ 17 billion.

The Senate text will need to undergo modifications to adjust the years that will serve as the basis for calculating ICMS, which requires a new vote in the House. Therefore, the negotiators of this solution want to take the opportunity to include diesel and gain time in the process.

A PEC has a longer rite. In the Chamber, it needs to go through two committees before being analyzed in plenary, in two voting rounds. In the Senate, the proposal passes through a committee before being submitted again to two rounds of appreciation.

In Congress, the faster processing of the project is seen as an advantage also to avoid political wear and tear on the part of parliamentarians in their ranks.

As the only PEC that has gathered signatures so far is that of the Senate, which is broader, the fear of deputies is that they will need to reduce the scope of the texts to avoid the collapse of the accounts. This is a wear and tear that they prefer to avoid on the eve of the election, just like President Jair Bolsonaro.

To make the path possible via the bill without violating the restrictions of the electoral law, government interlocutors recall that Bolsonaro does not need to put his fingerprint in the sanction of the text, after it is approved by both Houses.

The president has up to 15 days after receiving the autograph to sign a law, in full or with vetoes. After this period, the bill is enacted by Congress itself.

This is a rule created to prevent the Executive from indefinitely blocking laws passed by the Legislature, which could end up helping the President in his strategy of ensuring the reduction of fuel taxes without violating the electoral law.

Understand the proposals to reduce fuel prices

In the camera

PEC still without number (did not gather enough signatures)

• Author: Deputy Christino Áureo (PP-RJ), who presented a text formulated by the Civil House
• What it provides: Union, states and municipalities will be able, in 2022 and 2023, to reduce or eliminate taxes on fuel and gas without compensation; extrafiscal taxes (such as IPI, IOF and Cide) may also be reduced in 2022 and 2023, not only on fuel and gas
• Impact: BRL 54 billion, according to government calculations

in the senate

PEC 1/2022

• Author: Senator Carlos Fávaro (PSD-MT), with the support of the President of the House, Rodrigo Pacheco (PSD-MG)
• What it provides: allows, in 2022 and 2023, to reduce federal, state and municipal taxes on the prices of diesel, biodiesel, gas and electric energy, without compensation for the loss of revenue; allows the reduction of other taxes of an extrafiscal nature (such as IPI, IOF and Cide); authorizes the Union to create, in 2022 and 2023, a diesel aid of up to R$ 1,200 per month to self-employed truck drivers; it also allows the expansion of Auxílio Gás, in number of families and in subsidized value (50% to 100% of the value of the cylinder); authorizes transfers of up to BRL 5 billion to municipalities to subsidize free access to seniors and avoid a significant increase in tariffs
• Impact: More than BRL 100 billion, according to government calculations

PLP 11/2020

• Rapporteur: Senator Jean Paul Prates (PT)
• What it provides for: fixed charge of ICMS per liter of fuel (today, the charge is a percentage of the price); there would be a ceiling for the collection, equivalent to the current rate on the average prices of the two previous years; government is considering including in this project the exemption of diesel

PL 1472/2021

• Rapporteur: Senator Jean Paul Prates
• What it foresees: creation of a kind of fund to be used to stabilize fuel prices; resources would come from a tax on the export of oil and derivatives