Bolsonaro will remove products from the Manaus Free Trade Zone from the IPI cut, says governor

The governor of Amazonas, Wilson Lima (PSC), said this Wednesday (9) that the federal government will reissue the decree that promoted a linear cut of 25% in the IPI (Tax on Industrialized Products), leaving out products from the Franca de Manaus.

According to him, technicians would already be working on a new text, which would be published in March. Lima spoke to journalists at Palácio do Planalto, after meeting with President Jair Bolsonaro (PL) and Paulo Guedes (Economy).

“We had the guarantee that the products manufactured in the Manaus Free Trade Zone that already have their PPB (Basic Productive Process) will not suffer this reduction of the IPI, which guarantees competitiveness to companies that are installed in the industrial pole of Manaus”, said the governor.

The tax reduction, announced by the government on February 25, eased the tax burden on products such as cars, refrigerators, TVs and cell phones, and displeased parliamentarians from Amazonas, where the Manaus Free Trade Zone is located. Products from companies installed in the region are already exempt from IPI and lose competitiveness with the reduction of tax on others.

as showed the Panel, Senator Eduardo Braga (MDB-AM), leader of the party in the House, met with Guedes earlier, and proposed creating exceptions to the decree that reduced the IPI by 25%. The objective would be to exclude products from the Basic Production Process that are produced in the region from the measure.

The Minister of Economy met with the Amazonas bench at the official Senate residence of Rodrigo Pacheco (PSD-MG), where they discussed the revision of the decree.

“There is some resistance, especially in relation to what is an interest not only of Amazonas, but of Brazil, of preserving the Manaus Free Trade Zone,” Pacheco said earlier. The senator also stated that the topic was being evaluated in the portfolio.

The Executive’s articulation with parliamentarians and with Lima is part of a government negotiation to vote in the Senate on a bill to exempt fuel taxes.

The proposal, which was scheduled to be voted on on Wednesday, as the government wanted, ended up being postponed to this Thursday (10).

According to government sources, the new IPI decree should only be published after the vote on the fuel project by parliamentarians has been completed.

Such as sheet showed, while trying to reach a consensus on what complementary measures will be adopted to contain the escalation of prices at the pumps, due to the conflict between Russia and Ukraine, the government decided to prioritize the vote of the so-called PLP 11 in the Senate.

The orientation came after a meeting this Wednesday morning between Bolsonaro with ministers Paulo Guedes (Economy), Bento Albuquerque (Mines and Energy), Ciro Nogueira (Casa Civil) and with the president of the Central Bank, Roberto Campos Neto.

Should the government issue a new IPI decree, the change will in practice mean the reversal of the tax cut for these products. The old, higher rates would be levied on them again.

Guedes’s briefcase resisted the measure. However, behind the scenes, members of the Economy admitted on Wednesday afternoon that it would be difficult to hold back the pressure, especially amid the vote on fuel projects.

The Minister of Economy is betting on the approval of a bill that is in the Senate to change the ICMS (Tax on the Circulation of Goods and Services) on fuels and also to bring the federal tax rates on diesel and gas to zero.

Although he seeks not to directly link the two negotiations, IPI and fuel, Braga already says that the vote on the project can be postponed.

“There are some adjustments that need to be made, the rapporteur himself should now in the plenary ask us to postpone until tomorrow [quinta-feira, 10] or Tuesday the vote,” said the senator.

The economic team used the proximity of the vote on this project to curb the appetite of the political wing, which wants to start soon to create subsidies to contain fuel prices. A measure like this would have billions in costs for the Treasury.

“New ideas may arise in the government, we will have all tolerance and all good will, but I believe that the contribution of the federal government at this moment in relation to these projects that we are processing is the reduction of the PIS/Cofins rate in relation to diesel oil and cooking gas. This is already a significant contribution,” Pacheco told reporters earlier.

Within the government, however, the pressure from the political wing for more forceful actions continues and tends to increase in view of the further postponement of the Senate vote.

When announcing the IPI cut, Guedes defended the measure saying that it will boost the Brazilian industrial park. “The 25% reduction in the IPI is a milestone in the beginning of Brazilian reindustrialization, after four decades of deindustrialization,” he said. “[O imposto] it was a stake in the Brazilian industry, and we are going to take that stake out,” he said.

The minister admitted at the time that the team even studied a 50% cut, but opted for a milder reduction precisely to avoid a major impact on industries in the Manaus Free Trade Zone, which has as one of its differentials the exemption from IPI on goods produced in the region.

“The politics [de redução do IPI] came to stay. Now, there has to be enormous respect for a particular region,” Guedes said on February 25.