Project that limits ICMS is ineffective to stop high fuel prices, says CLP

Project that limits ICMS is ineffective to stop high fuel prices, says CLP

To try to stop the rise in fuel prices, the federal government and Congress embraced a project that limits ICMS to 17% on fuel, energy, telecommunications and public transport, which has already been approved in the House and awaits a vote in the Senate.

In the opinion of the Center for Public Leadership (CLP), the text that must be voted on this Monday in the Senate is ineffective in attacking the problem and a more focused solution is the transitory increase in income transfers to help the most vulnerable. The point is that this measure requires the government to cut other spending, unlike tax breaks.

“The main policy, therefore, that could be adopted would be a transitory increase in income transfers, especially for the poorest”, says the advance technical note to GLOBO.

Contrary to what the government has already done at the height of the pandemic, it is not necessary to create a new Emergency Aid, “but to increase the value of Auxílio Brasil itself and other policies, such as the Salary Allowance, which is paid once a year to formal workers. low-wage”.

The problem with these solutions is that the increase in these expenses must fall within the limit of the spending ceiling, a rule that limits the advance of one year’s expenses to the inflation of the previous period and forces the government to choose to “cut” other expenses to maintain the balance of income. your accounts.

See what Petrobras has already sold and what it intends to sell

See what Petrobras has already sold and what it intends to sell

“Tax waivers, on the other hand, do not apply to the ceiling. In this way, the government exempts itself from facing trade-offs society, preferring that society pay the bill in 2023”, says the note.

The CLP technical note points out that the text that is being processed in the Senate cannot guarantee a reduction in fuel prices just by eliminating taxes, since this cost is linked to the price of oil in dollars. In other words, there may be a reduction in the short term, but any variation in the international market will cause a new rise, without any permanent effect.

“Fuels have been increasing all over the world, which does not mean that nothing should be done about it”, says the text.

Regarding the alternative of changing Petrobras’ pricing policy, the note rejects the solution as it considers a type of indirect tax waiver with negative effects on the state-owned company’s investment capacity.

For the CLP, the proposal still generates other complications, such as the reduction of funding for basic education and the lack of compensation for the loss of collection by the municipalities.

Senators can make amendments to the text until 12 pm on Monday. The text, reported by Senator Fernando Bezerra Coelho (MDB-PE), has already undergone changes in relation to what was approved by the Chamber.

Among the changes is the inclusion of a provision that zeros federal taxes levied on gasoline by the end of 2022. The senator also zeroed federal taxes levied on ethanol and alcohol added to gasoline until 2027, so as not to harm the product competitiveness.

He also modified the compensation mechanism to states, which will be valid for six months. In addition to allowing the reduction of debts of states with the Union, the eventual difference between the loss of revenue from these products, respecting the trigger, can be used to pay debts with other creditors, as long as authorized by the government.

Source: The Globe

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