Governors decide to end ICMS freeze

By majority, the governors decided today to end the price freeze used as a basis for calculating the ICMS (Tax on the Circulation of Goods and Services) on fuels. Thus, from February 1st, this value may change again.

ICMS has fixed rates, which vary from 25% to 34% according to the state. These rates are levied on the weighted average price to the final consumer, which is readjusted every 15 days. This average price is affected by the readjustments promoted by Petrobras in the refineries, which end up reaching the gas stations.

In October, in an agreement signed in comsefaz (National Committee of State Finance Secretaries), the governors decided to freeze the price used in the calculation basis for 90 days, in an attempt to contain the increases in gasoline. The measure was in opposition to a proposal that, at the time, had passed the Chamber and was in the Senate, which would fix the incidence of taxes for one year. States even claimed that, if approved, it could lead to a loss of revenue of around R$24 billion.

With the decision now, however, the calculation basis oscillates again according to the prices at the pumps.

This week, Petrobras decided to raise fuel prices, after 77 days without changes. The average value of gasoline sold to distributors went from R$3.09 to R$3.24 per liter, an adjustment of 4.85%. For diesel, from R$ 3.34 to R$ 3.61 per liter, an increase of 8.08%.

Governor criticizes Petrobras

Coordinator of the National Forum of Governors, the governor of Piauí, Wellington Dias (PT), justified the decision by saying that prices did not fall during the freeze and that the federal government did not seek definitive solutions to high fuel prices.

Dias also criticized Petrobras’ pricing policy, which transfers variations in the dollar and oil in the international market to fuels.

According to him, the governors did their part, freezing the reference price for ICMS, but there was no appreciation of this concrete gesture or respect for the people. The answer was more fuel price increases by Petrobras, he said.

“Thus, most states voted to maintain the ICMS rule until 1/31/22, considering the government’s closure to dialogue and successive increases in fuel without concern for the economic and social impact of rising prices,” he said.

Who is getting the benefit, the people? No, [o congelamento] it’s only serving to increase Petrobras’ billions in profits. Where is the interest, the public commitment?
Wellington Dias, governor of PI and coordinator of the National Forum of Governors

Charged by successive increases in fuel prices, President Jair Bolsonaro has said that the blame for the high price of fuel is the levy of ICMS, a state tax — the federal government is the controlling shareholder of Petrobras.

Bolsonaro has already gone to the STF to try to force Congress to vote on a bill that seeks to change the way in which this tax is levied, but a lawsuit on the subject has not yet been judged by the court.

What makes up the price of gasoline

The price of regular gasoline is composed of five items, according to the ANP (National Agency for Petroleum, Natural Gas and Biofuels):

  • Producer price (Petrobras refineries and importers);
  • Ethanol price – the fuel that arrives at service stations is 73% gasoline A and 27% ethanol;
  • Federal taxes – PIS, Cofins and Cide;
  • State tax – ICMS;
  • Distribution, transport and resale.

*With information from Agência Estado and Reuters

About Abhishek Pratap

Food maven. Unapologetic travel fanatic. MCU's fan. Infuriatingly humble creator. Award-winning pop culture ninja.

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