Governors end ICMS freeze

By majority, the governors decided today to end the freezing of ICMS (Tax on the Circulation of Goods and Services) on fuels. Thus, from February onwards, the tax will be applied again.

The agreement was signed at Comsefaz (National Committee of State Secretaries of Finance). In November, governors opted to remove the ICMS increase in an attempt to reduce the price of gasoline, which was already on the rise.

However, now they believe that this is no longer advantageous. “Who is getting the benefit, the people? No, it’s only serving to increase Petrobras’ profits. Why the increase in fuels that were given? To maintain and increase Petrobras’ billions of profits! Where is the interest, the commitment? public?”, said Wellington Dias, governor of Piauí and coordinator of the National Forum of Governors.

Last year, with the constant change in prices of diesel and gasoline, President Jair Bolsonaro (PL) accused that the problem would be the high ICMS pricing by the states.

Thus, the governors decided to suspend the addition of the tax, the value of which is defined by each state. State leaders say that since then, the federal government has not sought definitive solutions to high fuel prices.

How does ICMS work?

With today’s decision, states must return to the usual ICMS calculation, whereby the tax is levied on the weighted average price to the final consumer, which is readjusted every 15 days.

According to data from Fecombustíveis (National Federation of Fuel Trade), the rate varies between 25% and 34% on gasoline, depending on the state.

The final price of fuel is composed of the amount charged by Petrobras at the refineries (linked to the price of a barrel of oil on the international market and to the exchange rate), plus federal (PIS/Pasep, Cofins and Cide) and state (ICMS) taxes, in addition to distribution and resale margins and the cost of biodiesel, in the case of diesel oil, and of ethanol, in gasoline.

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 the State Agency

About Abhishek Pratap

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

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