For ethanol, the price reduction will be R$ 0.38. The measure takes effect from July 1st. There was also a reduction in the ICMS on energy and communications – telephony tariffs.
With the decree signed by Casagrande, the new ICMS rates will have the following ceiling:
- Gasoline – goes from 27% to 17%
- Ethanol – goes from 27% to 17%
- Energy – goes from 25% to 17%
- communications – goes from 25% to 17%
Casagrande pointed out that the measure is a contribution by the State to controlling inflation, but highlighted that other factors interfere with the price of fuel, which may affect the expected reduction.
“Even though they are important, these measures may not be enough to contain this rise in prices. The amount charged at gas stations is also impacted by other factors, such as the value of the dollar, oil and political instability”
Other actions need to be taken by the federal government and the National Congress, in Casagrande’s assessment. “Either it changes the international parity, or it votes a fund for equalization and stabilization of prices, or it grants subsidies for those who use transport for a living. Measures that allow, in fact, to feel in the pocket the reduction of these values”, pointed out Casagrande.
Espírito Santo had already frozen the ICMS on fuels in September last year, when the update of the Weighted Average Price to the Final Consumer (PMPF) was suspended. “We failed to raise around R$ 300 million with our decision to freeze ICMS”, he recalled.
IMPACT ON STATE REVENUES
The loss of revenue with the reduction of ICMS, in the next six months, was estimated at R$ 1.14 billion, with R$ 265 million from the municipalities and R$ 876 million from the state fund. For the next year, the estimate is R$ 2.28 billion.
For this year, the government does not plan cuts or reductions in the budget. It will make use of the current collection, which has been showing good results, and the resources saved in previous years.
“We will have to make up for that somehow. This year we will use the surpluses from previous years and the excess collection, which is a little better than expected. For next year, our team will have to think about new measures”, declared Casagrande.
Over the next six months, teams from the Finance and Planning secretariats will study alternative measures to increase revenue and cut costs. Two areas that could be impacted are Education, which receives 25% of ICMS resources, and Health, 12%.
PRESIDENT’S VETO OVERRIDE
The governor said that he “will work” now to overturn President Jair Bolsonaro’s (PL) veto of compensation that was provided for in the law that limited ICMS rates to between 17% and 18%, depending on the location.
“The law passed in Congress established compensation for states to reduce the impact of lost revenue, which was vetoed by the president. We will work to overturn the veto in Congress,” Casagrande stressed.
“The law passed in Congress established compensation for the States to reduce the impact with the loss of revenue, which was vetoed by the president. We will work to overturn the veto in Congress”
Espírito Santo was the third state to announce the reduction of ICMS, after São Paulo and Goiás. Another eleven decided to appeal against the decision. “We will not go to court. We will adjust the public administration to withstand the impact”, informed Casagrande.
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