Bolsonaro Will Spend R$ 29 Billion of the Union in New PEC to Compensate for Suspension of ICMS Collection on Fuels, Without Affecting Petrobras

The Bolsonaro Government Now Seeks Measures to Compensate States for the Suspension of ICMS Collection on Fuels and Will Spend R$ 29 Billion from the Union with the New PEC, Without Causing Impacts on the Profit Obtained by Petrobras in the Sharing.

Senator Fernando Bezerra (MDB-PE), rapporteur of the Proposed Amendment to the Constitution (PEC) of Fuels, announced last Wednesday (08/06) that the Bolsonaro Government will spend R$ 29 billion in compensation to the states for the suspension of ICMS collection on fuels in the coming months. Additionally, the amount would not affect the share of other Petrobras shareholders and is expected to contribute to a reduction in fuel prices in the national market in the coming months.

Value of R$ 29 Billion Must Be Passed on to States with New PEC to Compensate for the Suspension of ICMS Collection on Fuels in Brazil

To address and compensate the states regarding the suspension of the Tax on Circulation of Goods and Services (ICMS) on fuels from July 1 to December 31, the Bolsonaro Government is now preparing a risky strategy for the remainder of the year. According to Senator Fernando Bezerra, who presented the PEC of Fuels, the Government will spend R$ 29 billion to compensate for the economic losses in the states over the coming months.

The adoption of the suspension of ICMS collection on fuels such as gasoline and diesel aims primarily at reducing resource prices within the national territory. However, it is through this revenue that states pay public servants and allocate resources to health and education, for example.

Thus, the Government is now seeking measures to address the current situation after the suspension of this collection and will adopt financial compensation with the recently presented new PEC.

Therefore, to ensure that the states agree to the suspension of the collection without any problems, the Government is now offering compensation for the lost revenues and will spend R$ 29 billion to guarantee this. However, sector specialists and economists believe that this is a desperate measure and that it will not help reduce fuel prices, as it does not address the root cause of the increases in Brazil: the pricing policy practiced by Petrobras.

Experts and Economists Criticize the Bolsonaro Government’s Decision Regarding the PEC of Fuels and Claim the Strategy Aims to Benefit Only Petrobras

The new proposal from the Bolsonaro Government for financial compensation to the states for the lost amount with the suspension of ICMS collection aims to ensure that the profits of Petrobras shareholders remain intact. This is because the company achieved a revenue of about R$ 100 billion from fuel sales in 2021, and with the Government’s shareholding being 37%, the Union received R$ 37 billion from the state-owned enterprise.

In this way, the Government will maintain the profits of other shareholders and utilize the revenues collected by the Union, but specialists and economists in the sector criticize the decision. Thus, economist and professor at the Federal University of São Paulo (Unifesp), André Roncaglia, emphasized: “Note the amount of adjustments and imitations in the Constitution to protect a small group of people, the minority shareholders of Petrobras. Measures are piling up to try to compensate for the rise in fuel prices because the Government does not want to address the root of the problem.”

Finally, Senator Zenaide Maia (Pros-RN), in a debate about the PEC of Fuels, stated that the Government is prioritizing a group of millionaire shareholders. While the Brazilian population suffers from problems such as hunger, unemployment, and even the high prices of fuels that the Government claims to want to reduce with this decision.