The governor of São Paulo, Tarcísio de Freitas (Republicans), stated this Monday, 30, that he considers the federal government’s proposal to grant a subsidy of R$ 1.20 per liter to imported diesel to be “reasonable” – a mechanism that works as a direct subsidy to importers. According to him, the São Paulo administration must adhere to the measure, although the topic is still under discussion. The subsidy would have half of the cost covered by the Union (R$ 0.60) and the other half by the States.
The head of the São Paulo Executive praised the new proposal by the Minister of Finance, Dario Durigan, which is supported by the recent performance of federal revenue in his assessment. According to him, revenue from Income Tax has exceeded budget forecasts, which, consequently, increases transfers to States through the State Participation Fund (FPE), linked to this collection.
“They structured another form of compensation: a reduction in this portion of the FPE, in which the State would pay half the cost within the logic of the subsidy,” said Tarcísio. “This idea seems reasonable to us, and we need to see how it will be put together, how it will be structured. But, in principle, the idea of the State of São Paulo is to join.”
According to the Political BroadcastGrupo Estado’s real-time news system, said that the São Paulo government rejected the initial proposal to reduce the Tax on Circulation of Goods and Services (ICMS) on diesel. In a press conference following the delivery event for the Casa Paulista housing program in the capital of São Paulo, Tarcísio explained his position.
“When there was the first discussion about the ICMS, it was a measure that, from a technical point of view, was absolutely unfeasible,” said the governor. “From the moment you give up an ICMS income, you will have to offer another in compensation. Otherwise, you will fail to comply with what is stipulated in the Fiscal Responsibility Law, and the effect of this on the citizen is null.”
According to Tarcísio, the federal government has a wide range of fiscal instruments to compensate for revenue losses. According to him, by reducing taxes such as PIS/Cofins on fuels, the Union is able to recover revenue through an increase in the export tax on oil, nullifying the impact of the exemption.
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For him, this logic does not apply to States, which concentrate their taxation on consumption, which would make similar measures involving ICMS unfeasible. He added that, in crisis scenarios, the Union even tends to increase revenues, driven by sources such as royalties, exports and dividends from Petrobras, so that, although there are losses in certain areas, there are relevant gains in others.
Before the meeting of the National Council for Finance Policy (Confaz) with state finance secretaries last Friday, 27th, in São Paulo (SP), the subsidy proposal was viewed with reservations. Behind the scenes, it was said that many points needed to be clarified, but so far there has been no consensus, and the lack of information for a precise calculation of impacts has contributed to divergences.
The executive secretary of the Ministry of Finance, Rogério Ceron, said, after the meeting, that a group of States resistant to the idea understood the proposal. He even stated that a significant number of States have already signaled their adherence to the government’s proposal.
