Bolsonaro sanctions bill that changes ICMS charge on fuels

On Friday night (11), President Jair Bolsonaro (PL) fully sanctioned the bill that amends the collection of ICMS (Tax on the Circulation of Goods and Services) on fuels and resets the PIS/Cofins rates on fuel. diesel and gas until the end of 2022, election year. With the sanction, the measure takes effect.

The text was approved by both deputies and senators in the early hours of this Friday, after Petrobras announced a mega-increase in gasoline and diesel prices. The state-owned company had to readjust values, after the war in Ukraine put pressure on the dollar and the international price of oil.

During the weekly broadcast on his social networks, while parliamentarians were still voting on the text, Bolsonaro had already said that he would sanction the measure as soon as it was approved.

“If the Chamber approves today, I don’t care what time it is, I sign any time of the night or dawn. And from tomorrow, for example, on the diesel issue, instead of charging another R$ 0.90 a liter —which is absurd— if you would charge another R$ 0.30. It’s a lot, but it reduces this impact”, he said.

The president also said that the law should generate a reduction of R$ 0.60 per liter of diesel – which would reduce the impact of the increase announced by Petrobras.

“The tax discount from the sanction of the law will be R$ 0.60 [por litro] in the price of diesel”, he said.

Both Bolsonaro and lawmakers complained about the increase in the state-owned company, while Congress was still discussing the proposal. The measure increased pressure for initiatives to contain the effects on the bomb.

After the Petrobras readjustment, there was a rush to gas stations in an attempt to supply even at lower prices.

Although Congress passed the bill quickly, the votes were marked by criticism of the state-owned company’s pricing policy.

Finally, the deputies approved the text by 414 to 3. In the Senate, it was 68 votes to 1 — the PIS/Cofins exemption on diesel was analyzed separately and was maintained by 56 votes to 8.

The government has been trying for months to approve the change in ICMS collection, in an arm wrestling match with the governors.

While the president accuses states of profiting from the rise in prices, via the collection of ICMS, state managers point the finger at the price policy of Petrobras, whose controlling shareholder is the Union.

The rise in fuel is one of the main concerns of the Palácio do Planalto and the Bolsonaro campaign, which seeks to be reelected this year.

The chief executive is in second place in the polls, behind former president Luiz Inácio Lula da Silva (PT).

On different occasions, Bolsonaro and the Minister of Economy, Paulo Guedes, defended a contribution by governors to contain the price of fuel.

With support from the Planalto, the federal government will give up a collection of R$ 18 billion to zero PIS/Cofins rates on diesel and gas by the end of the year.

The states, in turn, claim that the measure will not solve the problem and complain about the loss of revenue.

“We want to help lower the price, and they can no longer blame the ICMS”, said the governor of Piauí, Wellington Dias (PT). “We agreed to deal with ICMS on consumption in the tax reform, where ICMS is on fuel and also energy and others. But with the responsibility of offsetting revenues.”

Dias also stated that the bill voted on is unconstitutional and that he will appeal to the Federal Supreme Court (STF). “We will not accept taking money from the people, because public money belongs to our people, to send it to the gambling of speciation and profits like the R$ 103 billion Petrobras distributed to investors, from the poor people to the pockets of the richest”, he highlighted.

According to the text of PLP 11, the states must regulate the creation of a single ICMS rate on fuels within the scope of Confaz (National Council for Finance Policy). In addition, the text provides for a change in the rate model, from a percentage on the value (ad valorem) to a fixed value on the liter (ad rem).

The single rate must be applied to gasoline, diesel, ethanol and cooking gas. Initially, it would also apply to kerosene for aviation, but the deputies excluded the possibility during the vote in the House. Although unified among the states, the charges may be differentiated by type of fuel, according to the text.

While this is not implemented by the governors, the tax on diesel and biodiesel will have to be levied on a defined calculation basis, obtained by the moving average of the last five years.

The rule, treated as a transition, would be in effect until December 31, 2022. In practice, the text forces an immediate change in the tax.

The change in fuel taxes is the economy’s bet to try to placate the growing pressure for direct subsidies to reduce fuel prices. The folder commanded by Guedes tries to minimize damage and resists the measure.

The expectation of technicians from Guedes’s portfolio was that there would be some relief in dollar and oil prices, which accelerated in the wake of Russia’s invasion of Ukraine. The announcement of the adjustment by Petrobras, however, ended up maintaining the high pressure for subsidies.

A wing of the Planalto also bet on the thesis of the Economy.

On the other hand, government ministers believe that the tax cut does not remove the need to implement subsidies to reduce the price at the pump more quickly. Therefore, this hypothesis remains strong in the political wing, which credits Guedes with the fact that an action in this sense has not yet come to fruition.

UNDERSTAND FUEL PROPOSALS

PLP 11/2020

What provides:

• Adoption of a single ICMS rate on fuel, with a fixed charge per liter (today, the charge is a percentage of the price);

PL 1472/2021

What provides:

• It expands the Auxílio Gás, to at least 11 million families (today, the benefit is paid to 5.5 million beneficiaries of Auxílio Brasil).

• Creates an aid of R$ 300 for taxi drivers, app drivers and small boat pilots who have a family income of up to three minimum wages. Drivers qualified to drive mopeds or motorcycles of up to 125 cc would receive a lower amount of R$100.