Economy talks about expanding Brazil Aid, but Planalto wants to relieve gasoline

In yet another government clash over the fuel crisis, the team of Minister Paulo Guedes (Economy) is considering a temporary increase in the value of Auxílio Brasil as an alternative to the exemption of federal taxes on gasoline, mentioned this weekend by President Jair Bolsonaro (PL).

The option of boosting the benefit to the population is for now rejected in the Palácio do Planalto and by other wings of the government, which see the cut in taxes on gasoline as a way to relieve pressure on the pockets of taxi drivers, motoboys and app drivers — categories that are part of the president’s electoral base.

In the economic team, the expansion of the benefit is preferred by technicians because it would be a more focused measure. The exemption would also end up reaching middle and high-income families.

On the other hand, the Minister of Citizenship, João Roma, says that there is no study on raising the value of the benefit. “I’m not aware of any negotiations regarding the increase in Aid Brasil,” Roma told sheet. The folder is responsible for the social program.

Any initiative, however, will depend on the unfolding of the war between Russia and Ukraine, argue Guedes’ interlocutors. The escalation of the conflict would maintain the pressure on international oil prices and on the dollar, justifying complementary measures to contain the impact of the bombs and even the declaration of calamity.

Congress has already approved the cut in PIS/Cofins rates on diesel and cooking gas, but ministers on the political wing have advocated new immediate actions to contain fuel prices.

On Saturday (12), Bolsonaro said he could send a new project to expand the exemption for gasoline as well.

“It was planned to do something similar with gasoline, the Senate decided to change it at the last minute, otherwise we would also have a discount on gasoline, which is quite high. I study the possibility of a complementary bill, with an urgent request, study, right? , for us to do the same thing with gasoline”, he said.

The Economy, however, fears a disorganization of public accounts. Zeroing PIS/Cofins rates on gasoline would cost R$ 23.8 billion. A cut in Cide (Contribution for Intervention in the Economic Domain) could result in the waiver of another R$ 3 billion.

Guedes is trying to buy time in the hope that the conflict in Europe will cool down, reducing pressure on oil and exchange rates.

The assessment by the minister’s team is that it is necessary to wait for the effects of Complementary Law 192, which reduced PIS/Cofins on diesel, biodiesel and kerosene for evaluation, in addition to having changed the collection of ICMS (Tax on the Circulation of Goods and Services) on fuels.

In the view of economics technicians, there is no need at the moment to implement additional measures. Interlocutors of Guedes mention that the price of oil in the international market has given some relief, which would reinforce this assessment.

On the other hand, the head of the economic team has already publicly admitted the possibility of declaring calamity if the war persists, which would allow Bolsonaro to open his coffers in an election year. The electoral legislation itself allows the expansion of expenses in case of calamity.

On Monday, however, the president of the Senate, Rodrigo Pacheco (PSD-MG), ruled out this possibility. “Actually, ‘war budget’, or what Minister Paulo Guedes points out as pushing the calamity button, are extreme situations, which are only thought of in moments of a more acute crisis,” he said in Belo Horizonte, where he participated in the event. Business Connection.

“Right now, it’s not on the table to be negotiated,” he said, advocating a solution through the Union between the Executive and Legislative branches to contain the problem, based on a “common routine of approval of projects” in Congress.

Government officials say the president wants to respond to the portion of his electorate that is made up of motorcyclists, taxi drivers and app drivers, who are affected by the rise in gasoline. This public has so far not benefited from the diesel tax exemption.

Bolsonaro’s assistants estimate that an increase in Auxílio Brasil would not reach this population, since the benefit is aimed at low-income families. Today, the program pays at least R$400 to 17.5 million families.

The way out defended by this group are measures that impact fuel prices in general, in order to minimize the effects of the rise also for middle class Brazilians.

Gasoline is the most important sub-item in the calculation of inflation. Last year, fuel recorded a 47.49% rise, contributing to the 10.06% rise in the IPCA (Broad Consumer Price Index) in 2021. Official inflation was the highest since the Dilma Rousseff government ( PT).

Bolsonaro has been concerned about the weight of gasoline in price trends and in consumers’ pockets. On Saturday, the president himself said that he spoke with the president of the Central Bank, Roberto Campos Neto, to find out how much the rise in gasoline influences inflation.

The president of the Senate, in turn, has been defending that Petrobras, as a state-owned company, assume responsibility in the attempts to contain the escalation of fuel prices.

“Petrobras today has a profitability on the order of three times more than its competitors, billions in dividends, and obviously this is very good to happen. But this cannot happen at the sacrifice of the Brazilian population, which supplies its vehicles or that needs public transport,” he said on Monday.

with Reuters