Bolsonaro Pushes Truckers Pressure onto Governors by Proposing to Change State Taxes

RIO DE JANEIRO, BRAZIL – With no room to meet truckers’ demands, President Jair Bolsonaro announced on Friday, February 5th, that he is considering a bill for the Tax on the Circulation of Goods and Services (ICMS), a state VAT tax on fuel, to be paid at refineries and not at gas stations (where the cost is higher) or by adopting a flat-rate value.

“Should it be legally possible, next week we will present a proposal for the ICMS tax to be levied on the price of fuel at refineries or at a flat-rate value. And the respective legislative assemblies will define this percentage or this flat-rate value”, said the President. In practice, Bolsonaro is trying to gain time with a workers union considered crucial by his Government by putting pressure on governors.

Bolsonaro made the statement following a meeting with Ministers and the President of Petrobras, Roberto Castello Branco, to seek solutions to curb soaring fuel prices in Brazil. The chief executive further stated that, in the federal sphere, the collection of PIS/COFINS (federal taxes based on the turnover of companies) on fuel has a fixed rate of 0.35 cents – which has not been readjusted since 2019 – and it is the ICMS rate that varies. The state tax is charged today as a percentage of the value of fuel at the time of sale at the station, higher than in refineries.

For days, the Government has been discussing a way to lighten the hike in fuel prices, which has led to new truckers strikes in the country.

Expensive fuels are also considered politically negative for the government’s popularity. Recent surveys show that Bolsonaro administration is rejected by six out of ten Brazilians and that 53% of people now support his impeachment.

Last week, Petrobras announced a new rise in gasoline (5%) and diesel (4%) prices at refineries. It was the second increase in gasoline in 2021. Last Monday, a strike was called by truckers, but had a low adherence rate, to the relief of the President, who counts on teamsters as allies of his administration.

Alongside Bolsonaro, Minister of Economy, Paulo Guedes said he was directed by the President to lower the price of fuel, by reducing federal taxes. “We are looking at how to lower the PIS/Cofins,” he said, stressing that the government could not “remove everything at once”.

Bolsonaro also reiterated that his Government will never control the prices of Petrobras. “Petrobras is in the global context with its own policies and we respect them,” said Bolsonaro. The president said that interference in the state-owned company happened in the very recent past, when directors were appointed. “And we know Petrolão. Our policy is not to interfere. So much so that the Minister of Mines and Energy [Bento Albuquerque] appointed Castello Branco to run Petrobras and he was free to choose his directors,” he added.

Source: El Pais