The states reacted to the package of measures announced by the federal government to contain the rise in diesel and rejected a request from President Luiz Inácio Lula da Silva to reduce the Tax on Circulation of Goods and Services (ICMS) on fuels, which is a state charge.
In a statement released this Tuesday (17th), the National Committee of Finance Secretaries (Comsefaz) stated that cutting taxes does not guarantee relief when consuming and could cause billion-dollar revenue losses, with a direct impact on areas such as health, education and public safety.
According to the document, there is no consistent evidence that tax reductions are passed on to the final price at the pumps. In the secretaries’ assessment, a relevant part of this benefit tends to be absorbed throughout the distribution and resale chain, which limits the effect on the consumer.
Comsefaz mentions that in the last three years, the price of gasoline fell 16% at refineries, but rose 27% at gas stations, indicating that the cost reduction does not always reach the consumer’s pocket.
“The result is that the population ends up bearing a double loss. On the one hand, it does not effectively receive the expected reduction in the final price of fuel. On the other, it bears the effects of the suppression of public revenues essential to the financing of policies and services essential to society. Instead of producing real relief at the pumps, a new reduction in the ICMS could, in practice, weaken the capacity of the public authorities to serve precisely the population it intends to protect”, says an excerpt from the note.
The states’ reaction comes after the government announced a set of measures to contain the rise in diesel prices in the face of the rise in oil prices on the international market. Among the actions are the zeroing of federal taxes on fuel, the payment of subsidies to producers and importers and the creation of mechanisms to stimulate internal refining and expand supply. Members of the economic team also started to defend that states reduce ICMS as a way of increasing the effect of these measures on the final price to the consumer — a point that motivated Comsefaz’s reaction.
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At the end of last week, President Luiz Inácio Lula da Silva asked for the collaboration of state governments to contain the rise in fuel prices. When commenting on the announced package, the PT member said he expects “good will” from governors to reduce the ICMS on diesel, within the possibilities of each state.
— We are going to do everything possible and, perhaps, wait until the good will of the state governors, who can also reduce the ICMS a little on the price of fuel, whatever it is possible for each state to do, so that we can guarantee that this war does not reach the driver’s pocket, the truck driver’s pocket. If it doesn’t reach the truck driver’s pocket, it won’t reach the plate of beans, lettuce salad, onions and the food that people eat most — said Lula.
The states, however, argue that they have already been contributing to dampening the fluctuations. With the current ICMS charging model — set at a value per liter — the relative weight of the tax decreases when prices rise.
“It is also important to consider that, in the model currently in force, states have already been contributing, in practice, to dampening part of the fluctuations in fuel prices. With the adoption of single-phase taxation at a specific ad rem rate, the ICMS began to be charged at a fixed value per liter, with an annual update based on price averages calculated by the National Agency for Petroleum, Natural Gas and Biofuels (ANP). This means that increases caused by international crises, shocks in oil or exchange rate variations are not automatically accompanied by taxation”, says Comsefaz.
Furthermore, the secretaries highlight that recent changes in fuel legislation have already caused significant revenue losses. Comsefaz’s own estimate points out that the changes since 2022 generated an accumulated negative impact of R$189 billion on the finances of the states and the Federal District until the end of 2025.
Another point raised is the difference in fiscal capacity between the Union and states. While state governments depend heavily on ICMS — which accounts for around 20% of total revenue —, the Union has more diversified sources, including revenue linked to the oil sector. According to the entity, the dividends received by the Petrobras Union in 2025 alone corresponded to approximately half of everything that the states collected with ICMS on diesel.
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