Measure comes amid conflicts in the Middle East and the risk of rising fuel prices
O President Lula announced in collective which will reduce taxes on diesel this Thursday (12). PIS and Cofins, the only two federal taxes on fuel, were eliminated, according to Planalto. In this way, the diesel import and commercialization rates were zeroed.
The decision includes a Provisional Measure that pays aid of R$0.32 per liter to diesel producers and importers and three presidential decrees. The action, according to the government, should generate relief of R$0.64 per liter at the pumpssince PIS/Cofins added together also generated a cost of R$0.32.
The MP also foresees a tax on oil exportso that internal fuel refining increases and guarantees supply to the population, as announced by Planalto. The measure also aims to pass on the income obtained from the increase in fuel prices to the population.
Furthermore, the MP provides the National Agency for Petroleum, Natural Gas and Biofuels (ANP) with new monitoring instruments to ensure that price abuses do not occur to consumers in Brazil or other abusive market measures.
According to the government, the reductions must be clearly informed to consumers at gas stations.
As actions take place in response to conflicts in the Middle East and tensions around the Strait of Hormuz, where much of the world’s oil passes. Iran announced during the war with Israel and the United States.
The president participated in the announcement together with the Ministers of Finance, Fernando Haddad, Minister of the Civil House, Rui Costa, and Minister of Mines and Energy, Alexandre Silveira.
According to the Minister of Finance, there are at least two refineries with up to 50% idle capacity.
Lula was the first to speak and announced the tax reduction as a “huge sacrifice”. According to him, this is the “measure that will make us cut taxes on imports to avoid price increases”.
“We are making a huge sacrifice, economic engineering, to prevent the effects of the irresponsibility of wars from reaching the Brazilian people”, stated the President of the Republic.
Lula also asked governors to study reducing ICMS on fuels to avoid price increases. “We are going to do everything possible and hope for the good will of the governors, who can reduce the ICMS, in whatever way each State can do, so that this does not end up in the pockets of the driver and truck driver, and so that this does not reach the food”, he declared.
‘Irresponsibility of wars’
The President of the Republic blamed the “irresponsibility of the wars we are living” by the measures announced this Thursday. He stated that “the price of oil is getting out of control in almost every country in the world”.
“This means an increase in fuel in every country in the world. There is information that in the USA gasoline has already risen by 20%”, declared Lula. “This gesture of thinking that everything can be solved with wars brings harm to everyone, but it is the poorest layers who suffer the greatest consequences of these wars”, he stated.
Participation of taxes
According to the Brazilian Confederation of Agriculture and Livestock (CNA), Federal taxes represent around 10.5% of the value of diesel sold, while state ones add, on average, 38.4% to the final price of the fuel.
According to the Ministry of Mines and Energy (MME), until the At the moment, Brazil’s direct exposure to the conflict in the Middle East is “limited”.
Monitoring
This week, the ministry reported that there was an “intensification” of monitoring actions in global supply chains of petroleum derivatives and fuel supply logistics, in addition to the prices of these items on the commercial agenda.
Brazil is an exporter of crude oil and imports part of the derivatives consumed domestically, especially diesel.
*With information from Estadão Conteúdo
