Fixed ICMS rate may increase gasoline prices

After gas price drop, announced on Tuesday (16) by Petrobras, the entry into force of the single and fixed rate of the Tax on Circulation of Goods and Services (ICMS) should bring an increase. As of June 1, the charge will be R$1.22 per liter throughout the national territory. Currently, the rates are proportional to the value and are defined by each state, generally varying between 17% and 18%. The change will have an impact on the final consumer, since the tax amount is included in the resale price.

The reduction in the price of gasoline, as well as diesel and cooking gas, was announced on the same day that Petrobras presented its new pricing policy, putting an end to the International Parity Price (IPP) that had been in force for over six years. In the old model, the trends of the international market were followed. Now, the alternatives that the consumer has in the domestic market and the conditions obtained by the state-owned company for production, import and export are considered.

With the change, the new price of gasoline for sale to distributors was defined. The fall was R$ 0.40 per liter, from R$ 3.18 to R$ 2.78. The cut came into effect yesterday (17). The president of the Fuel and Lubricant Retail Trade Union of the Federal District (Sindicombustíveis-DF), Paulo Tavares, estimated in an interview with National Radio what to reduction in pumps at gas stations in the nation’s capital must be R$ 0.29 cents.

Based on the new model, Petrobras may announce new adjustments in gasoline prices by the end of the month, which may result in increases or decreases for the final consumer. The impact of ICMS should generate an increase in pumps. The change in the tax rule, which takes effect on June 1, was instituted by Complementary Law 192/2022. The value of the fixed rates was defined in March of this year by the National Council for Treasury Policy (Confaz). In the case of diesel, the change has been in force since May 1, with a charge of R$ 0.94 per liter.

In Rio de Janeiro, for example, the average gasoline resale price registered in last week’s survey by the National Petroleum Agency (ANP) was R$5.77. Considering that 18% of this amount refers to ICMS, the tax charge would be R$ 1.04. This is BRL 0.18 less than the BRL 1.22 that will be charged.

Collection

In the evaluation of the doctor of law, lawyer and professor at the Getúlio Vargas Foundation (FGV), Gabriel Quintanilha, the measure will have a positive impact on the states, because it will increase revenue, but, on the other hand, it will weigh more on the consumer’s pocket. According to him, last year, during the discussion of Complementary Law 192/2022, fuel prices were very high in Brazil and the solution found was to end the ICMS rate. to value, which consisted of a percentage of the value of the fuel, and charge a fixed rate per liter of the product. “That would reduce the price oscillation”, he explained to Brazil Agency.

Quintanilha indicated, however, that the discussion took a long time to reach a conclusion, because several lawsuits were filed by the states and the Federal Supreme Court (STF) conducted an agreement, defining the application of the fixed rate on that amount. For gasoline, at first, the rate was higher, reaching R$ 1.45 per liter. After the states realized that the value would be too high, it was reduced to R$ 1.22.

The FGV professor estimated that, probably, fuel will not get cheaper. On gasoline in particular, there should be an increase in the tax burden because the fixed rate absorbs the rise in the price of oil, but, on the other hand, keeps the collection high when the price drops. “The moment we are in today is exactly this: a tax rate to thefixed, per liter of fuel, which will generate more revenue than a to value, because the market reacted and the dollar is lower, as well as the price of oil”. In the expert’s view, this new fixed rate was good for the consumer at that time, when it was discussed. Now, the scenario is different with the accommodation of the price of the dollar and, consequently, the price of fuel.

Standardization

In a note sent to TV Brazil, the National Council for Finance Policy (Confaz) said that, due to the single rate, in states with a current tax burden greater than that which will result from the application of the single rate, the tendency will be for a reduction in the prices of this fuel. He highlighted, however, that “in the states that have the opposite situation (current tax burden lower than that with the use of the to thethe tendency will be for prices to rise”.

The Legal and Tax manager of the Brazilian Institute of Petroleum, Natural Gas and Biofuels (IBP), which represents fuel distributors, Mozart Rodrigues Filho, told the Brazil Agency that the implementation of a single-phase ICMS had been a quest for the sector for some time, to put an end to the irregular market.

As a benefit of the uniform and nationwide rate for ICMS on fuel, which comes into effect in June, the IBP specialist estimated that there will be an end to the tax war between states, whose rates ranged from 22% to 34% on gasoline. He highlighted the “gain” with logistics. “Companies will be able to take the shortest path to deliver this fuel to the consumer and this will lead to the possibility of a price reduction.”

Mozart Rodrigues Filho explained that the measure disconnects the tribute from commodity. “Before, it was linked to the value of the fuel. It was a percentage. Now it’s uniform.” The measure brings more clarity and simplification both for the final consumer, as well as for companies and states. Federation units now have greater predictability of collection and will have a chance to recover tax fraud in the fuel sector that reaches R$ 14 billion a year, according to a study by FGV published in 2021.

The IBP manager analyzed that the final consumer also benefits because he can have a cost reduction in the commercialization of the fuel and this can later be passed on to the price. “Yes, there is a possibility for everyone to gain with the implementation of this single-phase ICMS. He seeks a more attractive business environment plus investments, because it makes everything simpler, clearer, more visible for anyone who wants to work in the sector”. By increasing competitiveness, the benefits will be for everyone, he added. Only hydrous ethanol will be left out, at that moment, of the ICMS monophasia, recalled Rodrigues Filho.