Chamber approves fixed amount to charge ICMS on fuel – News

10/13/2021 – 22:59
• Updated 10/13/2021 – 23:27

Pablo Valadares/Chamber of Deputies

Plenary Session of the Chamber of Deputies

The Chamber of Deputies approved this Wednesday (13), by 392 votes against 71 and 2 abstentions, the project that establishes a fixed amount for the collection of ICMS about fuels. The proposal goes to the Senate for analysis.

The approved text is the substitute the rapporteur, deputy Dr. Jaziel (PL-CE), to the Complementary Bill 11/20, by deputy Emanuel Pinheiro Neto (PTB-MT). The text obliges states and the Federal District to specify the rate for each product per unit of measure adopted, which can be liter, kilo or volume, and no longer on the value of the merchandise. In practice, the proposal makes the ICMS invariant against fuel price variations or exchange rate changes.

Dr. Jaziel estimates that changes in legislation should lead to a reduction in the final price charged to consumers of, on average, 8% for regular gasoline, 7% for hydrated ethanol and 3.7% for diesel B. “The measure it will collaborate to simplify the tax requirement model, as well as to a greater stability in the prices of these products”, he hopes.

Currently, the ICMS levied on fuels is due by tax substitution onwards, and its calculation basis is estimated from the weighted average prices to the final consumer, calculated every two weeks by the state governments. ICMS rates for gasoline, for example, vary between 25% and 34%, depending on the state.

According to the text approved by the Chamber, operations with fuels subject to the tax substitution regime will have specific tax rates per unit of measure adopted, defined by the states and the Federal District for each product.

Pablo Valadares/Chamber of Deputies

Dr. Jaziel, project rapporteur

The specific rates will be set annually and will remain in effect for 12 months from the date of publication. The rates may not exceed, in reais per liter, the average value of the final consumer prices usually practiced in the market considered over the two immediately preceding fiscal years, multiplied by the rate ad valorem applicable to fuel on December 31 of the immediately preceding year.

As an example, the average prices in September of regular gasoline, hydrated ethanol and diesel oil corresponded, respectively, to R$ 6.078, R$ 4.698 and R$ 4.728, according to the National Petroleum Agency (ANP). In the form of the substitute, the rate would be calculated based on the average of prices practiced from January 2019 to December 2020. During this period, resale prices ranged from R$ 4.268 to R$ 4.483, in the case of regular gasoline; from R$2.812 to R$3.179, in the case of hydrated ethanol; and from R$3,437 to R$3,606, in the case of diesel oil.

Pricing policy
The rapporteur noted that federal and state taxes are responsible for 40.7% of the price of gasoline. “Regardless of Petrobras’ pricing policy, the tax burden is decisive for the high cost of fuel,” said Dr. Jaziel.

Author of the project, deputy Emanuel Pinheiro Neto pointed out the high tax burden that weighs on the consumer’s pocket. “We have a tax burden of 36% of the GDP. Most of the impact is on the humble person, where the price of fuel impacts everything, such as the cost of freight”, he declared. He also stated that it is necessary to review Petrobras’ economic measures and pricing policy. “This project is only the first step, but it is a glorious step.”

Agreement between parties
The president of the Chamber, Arthur Lira (PP-AL), highlighted that the proposal was the subject of an agreement with the party leaders. “The government proposed to unify ICMS tariffs in Brazil in all states – which we all did not agree with – and what we are voting on is a project that creates an average of the last two years and, on this average, it is multiplied by the tax state of each state, with complete freedom for each state”, he affirmed.

Lira said that the project “has been around since the beginning of legislature” and it was debated in meetings at the Leaders College and that there was a procedural agreement with the opposition so that there was no obstruction in today’s session.

Rejected points
In the vote, the deputies rejected highlights from the opposition that sought to change Petrobras’ pricing policy, which is based on parity with the international oil market, or else to compensate for state tax revenue losses.

The following were rejected:

– PT amendment that would limit the validity of the specific rates defined by the states and the Federal District for the year 2021 only until December 31, 2021. The objective would be to limit possible losses in the states’ collections.

– PT amendment that would oblige Petrobras to calculate oil product prices in accordance with production costs calculated in national currency, limiting the application of exchange rate variation, of the international price of a barrel of oil, to the portion of imported oil products. The readjustments would be semiannual.

– amendment of the Psol that would set Petrobras’ prices based on internal extraction costs (lifting cost) and refining, with periodic readjustments to reduce price volatility.

– PCdoB amendment that would reverse the loss of ICMS collection resulting from the approval of the project for the payment of state debts.

– PT amendment that would prohibit the initiation or continuation of privatization processes, divestments or the conclusion of the sale of any Petrobras fuel production unit.

Learn more about the processing of complementary bills

Report – Francisco Brandão and Carol Siqueira
Edition – Pierre Triboli