Meeting to discuss diesel ICMS ends without agreement

The meeting of Confaz (National Finance Policy Council) to discuss the new model for charging ICMS on diesel ended without an agreement, the subject of an injunction by the STF (Supreme Federal Court) that may increase the price of fuel.

The government proposed the adoption of the transition rule provided for in the new ICMS law, which calculates the tax based on an average of the rates of the last 60 months and had already been the target of resistance from the states. The proposal was sent for evaluation by a working group, but without the support of all governments.

After the meeting, Comsefaz (National Committee of Secretaries of Finance, Finance, Revenue or Taxation of the States and the Federal District) said it would ask STF Minister André Mendonça for more time to question the injunction.

“We will provide the necessary information demonstrating that we have fully complied with Complementary Law 192”, said the Secretary of Finance of Pernambuco, Décio Padilha, who presides over Comsefaz.

The law determines that the ICMS on fuels will be charged in reais per liter, instead of as a percentage of the reference price, and on a single-phase basis, that is, only on production. The rate must be the same in all states.

State governments, however, set a maximum rate of R$ 1.006 per liter, with the possibility of discounts so that each state covers a rate similar to the current one. This solution was questioned by the government in the STF.

“We adhered to monophasia and complied with the law in the sense of observing that tax benefit being able to equalize loads and we did so”, defended Padilha, in a video released by his press office after the meeting this Thursday.

The extraordinary meeting was convened by the Ministry of Economy. The government tries to use the injunction to force states to adopt the transition rule provided for in the law, but states resist.

They assess, on the other hand, the injunction may actually cause a rise in the price of diesel, an effect contrary to the desired one, if everyone is forced to use the maximum rate.

In São Paulo, for example, the discount rate would be R$ 0.6597 per liter, equivalent to that charged today in the state. Thus, the use of the maximum rate provided for in the agreement would represent an increase of R$ 0.3463 per liter.

On average, Comsefaz estimates an increase of around R$ 0.20 per liter, at a time of record prices at pumps with the transfer of high international prices after the beginning of the Ukrainian War.

AGU had been warned that the injunction could have the opposite effect to what was desired, which was to lower the price of diesel with the application of the average rate of 60 months, but understood that the decision would force the issue of a new agreement by Confaz on the subject.

Representatives of the states, however, claim that there is no longer any point in talking about a transition period, as Confaz has already published an agreement with the definitive rules for the sector. The text says that the average would be applied “as long as the incidence of ICMS is not disciplined under the terms of this law”.