Fuels generate record tax revenue for Brazilian states in 1st quarter
RIO DE JANEIRO, BRAZIL – The ICMS tax on motor fuels and lubricants drew record collections from states in 1Q2022. The federal entities collected R$32.76 (US$6.5) billion in petroleum tax revenues from January to March, up 40.5% compared to the same period in 2021.
The share of sub-items for fuels and lubricants in the ICMS (goods and services trade tax) was 23.4% in 2021. It increased to 28.4% in 2022.
Power360 conducted the survey based on the panel Boletim de Arrecadação dos Tributos Estaduais (Tax Collection Bulletin of the States).
States’ revenues, adjusted for inflation, amounted to R$217 billion in the 1st quarter. In the same period last year, it was R$213 billion. In 2022, the real increase was 1.8%.
The ICMS was responsible for 80% of total state tax revenues. In 2021, the percentage was 78.5%.
The increase will be even higher when Piauí and Tocantins update their outdated data. The panel has not published the data for January and March of the northeastern state and for February and March of the northern state.
FUELS AND ELECTIONS
Fuel price increases were the subject of a dispute last year between Planalto Palace and state governors. President Jair Bolsonaro is working on a PEC (proposed constitutional amendment) to zero out federal taxes on products. He has called on 2021 states to cut taxes as well.
To put pressure on governors, in February 2021, Bolsonaro asked citizens to look at bills to see how much of the price is left as tax for state governments.
Governors froze the ICMS rate for gasoline and cooking gas in November. They extended the policy in March. Then Congress approved changes to the tax on diesel fuel after states criticized possible revenue losses.
Data for the first quarter of 2022 show there was no revenue loss. On the contrary, there was an increase in motor fuel revenue.
SURVEY BY STATES
Of the 27 states of the Federation, 6 achieved real growth of more than 10% in the first quarter of 2022 compared to the first three months of last year. The biggest highlight was Roraima, with an increase of 28.3%. São Paulo is the state with the highest revenues, R$66.42 billion.
The best performance in the public accounts of the states was also recorded by the Central Bank in the report on financial statistics.
In the 1st bimestre, the Monetary Authority calculated that the federal entities’ primary surplus – revenues minus expenditures – increased by 49.8% in nominal terms. They reached R$33.9 billion in the period, the highest since 1998.
The Central Bank has not yet released the data for March because of the civil servants strike.
With information from Poder360
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