what other countries do

With the international price of a barrel of oil on the rise — due to the war in Ukraine, sanctions against Russia and the high demand for energy after the most critical phase of the pandemic — consumers not only in Brazil, but also in several countries, have been paying more expensive for fuel.

Last Friday (17), Petrobras announced a new increase in the price of gasoline and diesel, which triggered a political crisis at the state-owned company and led to the resignation of José Mauro Coelho, until then president of the company.

To try to circumvent the successive increase in the prices of petroleum products, many countries have adopted similar strategies: creation of funds, tax cuts, subsidies and income transfers. But there are even those who created extra fees to raise more.

O UOL spoke with experts in this area to understand how each nation is dealing with the fuel crisis and what alternatives would be viable for Brazil. See below:

stabilization fund

Thinking in the long term, many countries created stabilization funds for the prices of petroleum products. This is the case of Peru and Chile.

“In Peru, they set a minimum level for fuel prices. If the price falls below that level, they raise taxes and collect this difference. When the price rises, they use the amount collected to try to hold back the increase”, he explains. Mario Rubens, economist and professor at Faculdade Getúlio Vargas (FGV).

“In Chile, it’s a little different. They have an applied investment portfolio and, with the profitability of this fund, they try to control more fuel prices there”, he adds.

Subsidies and income transfer

Other countries have bet on subsidizing the cost of oil derivatives so that the population does not feel so much the impact of high prices. This is the case of Portugal, United Kingdom, Japan, Estonia and Greece.

“Portugal is giving a discount of 10 euro cents, per liter, in the price of fuel. Limited to 50 liters per month. England is subsidizing the electricity bill in 200 pounds, which must be paid by the consumer in the future in up to five years”, says Mario Rubens.

It is worth remembering that, in Europe, much of the electrical energy is produced by gas or coal thermoelectric plants. Therefore, the increase in petroleum derivatives impacts not only on fuels, but also on the final price of the electricity bill.

Consumer tax cuts

Reducing taxes on fuel is one of the main strategies adopted by governments around the world. The most recent example is the United States, where President Joe Biden asked Congress on Wednesday for a three-month suspension of a federal tax on the price of gasoline.

India, Germany, Italy, Spain and Belgium also followed this line. “Tax cuts are one of the most common alternatives. In India, for example, taxes were cut on plastic, iron, steel and oil”, says economist Angela Póvoa, a professor at the Business School at the Pontifical Catholic University of Paraná ( PUC-PR).

Tax increase for companies

In contrast to other countries, Mexico created an extra tax for companies that are profiting more from the international increase in energy prices. With this collection, the country is able to subsidize the value of gasoline for the domestic consumer.

According to the chief economist at the Ministry of Finance of Mexico, this measure allows gasoline to be subsidized by up to 35% of the value. A similar measure was taken in Finland to contain the rise in fuel prices.

It’s in Brazil?

Brazil also chose to limit the maximum collection of ICMS (Tax on Circulation of Goods and Services) to 17%. The proposal was approved in Congress and is awaiting presidential sanction. However, for experts, this measure may become ineffective over time due to the nature of the fee.

“Missing the ICMS is a big mistake, because it is a tax that is levied in percentage. If it were a fixed tax per liter, it would be better. Besides, messing with the collection of the states brings another problem. [que perderam]? Of health, of education? You have a social side effect that is not being evaluated”, says Angela Póvoa.

Mario Rubens regrets that the government is not able to mitigate the rise in fuel prices and that there is a lot of political conflict. “They are blaming each other, but there is no government action to solve this problem,” he says.

According to the FGV professor, the best thing would have been to create a price stabilization fund. “But that would have had to be done a long time ago. Now, the only option is to reduce taxes, which will not work for a long time. The price here is international, that is, it will fluctuate with the market. If it continues to rise, it cancels out this tax reduction”, he explains.

Angela says the government can still work on creating social benefits for those most affected. “They can create a subsidy for truck drivers who depend on diesel and aid for people to be able to buy gas. However, as it is an election year, you cannot create income transfer mechanisms. This is an extra difficulty.”

About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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