Change in the calculation of ICMS on gasoline will increase fuel prices in 24 states

The new policy for levying the Tax on the Circulation of Goods and Services (ICMS) on fuel is already in effect. Since last Thursday (1st) the state tax has had a fixed amount of R$ 1.22 per liter of gasoline. Before, the states charged a rate that varied between 17% and 22% per liter. With the change, consumers in 24 of the 27 Federation Units (UFs) began to pay more for gasoline, according to Fecombustíveis (National Federation of Trade in Fuels and Lubricants).

According to the National Agency of Petroleum, Natural Gas and Biofuels (ANP), the average price of a liter of gasoline between May 21st and May 27th was R$ 5.26. As the average ICMS, still in the old model, corresponded to 20.5% of the price of gasoline, that is, R$ 1.08, according to Petrobras, the increase with the fixed tax will be R$ 0.14 per liter, except in the states of Alagoas, Amazonas and Piauí, where the change actually made fuel cheaper.

Economist Lucas Matos points out that the high does not only affect consumers who have their means of transportation in vehicles. The poorest layer of the population and transport app drivers will also feel it in their pocket.

“For the vast majority of the country, who use public transport and not cars, it is a very different reality. The great truth is that the Brazilian population feels differently, as in the increase in ticket prices”, he says.

Comes and goes

The calculation of ICMS on fuels has had some twists since last year. With the increase in oil prices on the international market and gasoline costing R$8 per liter, the National Congress approved two changes. In March 2022, it decided that, instead of each state charging its tax rate on fuels, which in some cases reached 32% on the liter, the states should establish a single value for the ICMS charged throughout the entire country. country.

In June last year, parliamentarians approved a measure to make essential goods fuel, which established a ceiling of 17% for ICMS in all states. Over the last few months, however, this limit was increased by some governors, while the regulation of the fixed value per liter for the whole country did not come out.

According to Renan Gomes de Pieri, economist at the Getulio Vargas Foundation (FGV), the decision of a fixed value of ICMS per liter is right. “Of course, nobody likes to pay taxes. This can have an effect on increasing production costs for several companies, given that transport is a key input, but it is important to rebuild state revenues. Of course, this is bad news for short term, but it is a policy that goes in the right direction”, he says.

However, he believes that the measure may cause noise at times when the price of gasoline decreases, since in the previous model the state tax decreased proportionally, which with the current setting will not be possible. “If that happens, the weight of the ICMS being constant per liter in the final composition of the price will be greater. Even greater than before, possibly. This will certainly create noise”, he adds.