On the eve of a meeting with the Minister of Finance, Dario Durigan, to discuss granting subsidies to diesel importers, state secretaries are divided in supporting the measure. The topic was discussed at a preparatory meeting of the National Committee of State Finance Secretaries (Comsefaz), but there was no agreement on the issue.
The matter will be discussed again this Friday, within the scope of the National Council for Financial Policy (Confaz), which is made up of state finance secretaries and chaired by the Ministry of Finance.
During the meeting of secretaries, states governed by the Workers’ Party (PT), such as Bahia, Piauí and Ceará, for example, supported the government’s proposal. Agricultural producing states also demonstrated support for agricultural producing states, due to the high cost of diesel for agribusiness; other states governed by other parties, such as Pará (MDB) and Maranhão (PSB), expressed favorably due to the political alignment.
São Paulo, for example, administered by Tarcísio de Freitas (Republicans) and the Federal District, governed by Ibaneis Rocha, who oppose the federal government, demonstrated strong resistance.
The government’s proposal is to subsidize R$1.20 per liter of imported diesel, with the bill being divided in half between the Union and the federative entities. According to the Minister of Finance, the measure would be restricted until May 31 and would cost R$3 billion in total and would be divided between states and the Union in half.
During the Comsefaz discussions, which lasted around two hours, some states refused to give up revenue, claiming that the Union always wins with this type of initiative. And therefore, he should bear the entire cost.
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No budget
There are states that claim they do not have the budget space to help pay for the measure. Some cite legal obstacles, such as the Fiscal Responsibility Law (LRF), for example, which requires a source of compensation in the event of resignation. Others have doubts about the form of compensation from the Union and when it will be done. And others are against it due to political positioning.
According to a secretary who did not wish to be identified, the government should propose partial accession and reach a minimum consensus. If you maintain your position for an agreement with all states, it will be more difficult to find a solution.
Even though there is goodwill on the part of the federal government to share the bill and seek a dialogue, which did not occur during former president Jair Bolsonaro’s administration regarding the issue, the expectation is that a solution will still take around ten days.
Voluntary adherence, however, could affect the federal government’s goal of reducing the price by R$1.20, if states like São Paulo, for example, are left out.
There are doubts whether the proposal will stand if some of the entities are left out. The letter sent to the secretaries states that the modeling was designed with the “operational assumption of adhesion of all” entities.
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Partial acceptance
If acceptance is partial, it is not clear whether the measure will be implemented and, if so, who will foot the bill for states that have not joined. The document explains that if there is agreement from the federative entities, the formalization will be done through an individual adhesion agreement by each state and the Federal District, in which they will express agreement with the value of the contribution and authorization for retention in the FPE.
Initially, the federal government suggested that states reduce the ICMS on diesel, but faced with resistance, it decided to focus on the subsidy. Even though the format of the relief proposed to importers has changed, states continue to fear the fiscal impact and have doubts about the application of the measure. The assessment, however, is that the final decision will be political.
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The subsidy would initially be paid by the federal government, which would then retain the corresponding amount for each entity in the State Participation Fund (FPE). The regulation would be subject to a provisional measure (MP).
Some of the secretaries assess that the fiscal impact is significant for some states, especially for those that do not benefit from the increase in oil on the international market and for those most dependent on the FPE. As they cannot issue debt, unlike the Union, the reduction in revenue via the FPE would have to be compensated with cuts in expenses, such as health, education and security.
