On Thursday night (23), President Jair Bolsonaro (PL) sanctioned the law that limits the rate of the Tax on the Circulation of Goods and Services (ICMS) levied by states on fuel, energy and public transport to 17%. Ignoring congressional negotiations to approve the project, Bolsonaro vetoed articles that provided for compensation to states for possible losses in revenue.
Compensation to states had been agreed by deputies, senators and governors so that the project on ICMS limitation could be passed through the Chamber and Senate. States have always been against the limit, but they ended up giving in to contribute to an effort to contain the prices of gasoline, diesel and electricity bills, as long as the Union guaranteed resources for public health and education policies.
ICMS is one of the major funders of these policies in the states and also in the municipalities, as cities receive part of what is collected by state governments.
:: Chamber approves ICMS limit on fuel ::
The National Forum of Governors has already estimated losses of R$ 65 billion in collection with the ICMS limit. The National Confederation of Municipalities, in turn, estimated that city halls will lose R$ 15 billion of their share of the tax.
The drop in revenue should occur because, with the sanction of the law, items of energy, communication and public transport are now classified as essential. Included in this list, ICMS on these goods and services cannot exceed 17%. Today, there are states that charge up to 30% on gasoline and electricity, for example.
Federal deputy Father João (PT-MG) called Bolsonaro a deadbeat because of the veto on compensation for the drop in ICMS, noting that this had been agreed with parliamentarians. According to João, the federal government applied “a coup” in the states.
“Governors will lose ICMS resources. There will be no compensation,” he wrote on Twitter. “[Bolsonaro] It vetoed ICMS compensation to the states. Party (Junina) with someone else’s hat”, he criticized.
Bolsonaro and Paulo Guedes are deadbeats. Governors will lose ICMS resources. The federal government delivered yet another coup. There will be no compensation. It vetoed ICMS compensation to the states. Make a party (junina) with someone else’s hat. Another novelty in Lei Kandir fashion.
– Padre João PT (@dep_padrejoao) June 24, 2022
ICMS leaves the agenda
The ICMS limit was part of a government plan to act on the tax in order to contain the rise in fuel prices. In addition to limiting the rate, Bolsonaro advocated that it be zeroed in exchange for other compensation, also in agreement with governors.
A Proposal for Amendment to the Constitution (PEC) for the ICMS exemption is already being processed in the Senate. Dubbed the PEC of Fuels, it predicts that governors who zero the ICMS on gasoline, diesel and gas between July and December will compensate for the loss of revenue by dividing R$ 29.6 billion that would be made available by the Union.
:: André Mendonça decides that ICMS rates on fuels will be the same throughout the country ::
In this second case, the ICMS reduction would not be mandatory. Governors could choose to adhere to the federal government’s plan.
The breach of the agreement on the compensation of the ICMS limit, however, practically put an end to the possibility of this plan working. So much so that senators are already working for the BRL 29.6 billion made available by the government to be used to increase the value of Auxílio Brasil from the current BRL 400 to BRL 600 and to create a truck driver allowance of BRL 1,000.
The increase in Auxílio Brasil and the truck driver allowance would be valid until the end of the year, the months in which the election will take place.
:: Mambembe solution, despair and improvisation: Bolsonaro’s plan to lower fuel ::
eye on the election
The eventual compensation of states that zero ICMS or even the creation of extraordinary benefits has been criticized for its proximity to the presidential election. Opponents of the government claim that Bolsonaro, who appears in second place in polls, could benefit electorally from the measures.
It is also said that they may even be considered illegal. The Elections Law prohibits the distribution of goods, values and benefits during electoral periods.
Senator Fernando Bezerra (MDB-PE), rapporteur for the PEC on Fuels, said this Friday (24) that consultations with the Federal Audit Court (TCU) and the Superior Electoral Court (TSE) indicate that the proposal defended by the government is regular. He admitted, however, that she must be questioned in court by opponents of Bolsonaro.
:: Aid for truck drivers is “electoral” and inefficient, says Dieese ::
This Friday, the minister of the Federal Supreme Court (STF), Gilmar Mendes, scheduled a conciliation hearing between the federal and state governments to discuss the collection of ICMS on fuel. The hearing was a request from states linked to a case that was already going through the court before the new law was enacted.
Editing: Nicolau Soares
