Lira criticizes ICMS rate defined by states and says that measure zeros Congressional effort

The president of the Chamber, Arthur Lira (PP-AL), criticized this Friday (25) the possibility that each state define its ICMS (Tax on Circulation of Goods and Services) rate on diesel and stated that the measure practically The Congressional effort to contain the rise in fuel has zeroed.

The president of the Chamber commented on the regulation voted on Thursday (24) by Confaz (National Council for Finance Policy), formed by the 26 states, the Federal District and representatives of the Ministry of Economy, and announced by the state secretaries of Finance.

At the meeting, the freezing of the ICMS tax base for gasoline, ethanol and cooking gas was also extended for 90 days.

Lira, who is in Maranhão, gave an interview to TV Mirante this Friday morning. Asked about the increase in fuel, the deputy recalled that the problem is global, aggravated by the pandemic and the war in Ukraine.

However, he affirmed that, in the country, there is a “very dangerous component, which is the ICMS, which the governors insist on saying is not ‘estate’, which does not initiate the increase, but it weighs a lot.”

“I usually call it the ugly duckling of the gasoline bill, it practically doubles when it comes on top of the entire chain. And the governors are insensitive to this fact”, he criticized.

Lira also accused the states, “which have gained so much in this period of the pandemic in relation to ICMS on the electricity bill, on the telephone bill and on the fuel bill”, of not wanting to give up this collection.

The president of the Chamber then commented on the approved regulation. According to the decision, the single rate of ICMS (Tax on Circulation of Goods and Services) on diesel will have a maximum limit of R$ 1.006 in the country, but each state will be able to grant a type of tax benefit that will, in practice, result in a lower charge to its consumers.

The design was designed to preserve state revenue at the same level as in November 2021, when the reference fuel prices for tax collection were frozen.

“And I got information yesterday that Confaz met in Brazil and practically zeroed everything we did in relation to PLP 11 [de combustíveis] in the National Congress, in a PLP voted on in both Houses, nullifying practically all the savings we made in relation to PIS and Cofins [impostos federais] of the Union”, criticized Lira.

“So it’s important that people know this, that we can bring this topic up for discussion this week in the National Congress, because states cannot have this lack of sensitivity at this moment in which they recovered their finances on top of an inflationary process and a heavy ICMS charge mainly on fuels.”

The format defined by the regulation also seeks to prevent consumers in some regions from ending up with a higher tax to compensate for the loss of revenue from other locations that, before the change, had higher rates on diesel.

The new rates take effect on July 1. Until then, the ICMS charge on fuels, including diesel, will continue to be made on the reference prices practiced in November of last year, maintaining the freeze.

The single rate throughout the national territory was a requirement of complementary law 192, approved by Congress and sanctioned by President Jair Bolsonaro (PL) on March 11. The proposal was a way the government found to try to force governors to change the fuel tax at a time of rising prices and rising inflation.

According to the text of the law, states needed to regulate a single ICMS rate on fuels, which would become a fixed value per liter (ad rem), replacing the current system of percentage on the value at pumps (ad valorem)​ .