To Control Rising Fuel Prices, Senate Approved Yesterday (06/14) A Constitutional Amendment To Maintain Competitiveness and Differentiate the Tax Burden of Ethanol Compared to Gasoline

If Approved, The Biofuels PEC, Which Is Part of the Project Package Aimed at Curbing the Rise in Fuel Prices, Will Be Valid For at Least 20 Years

Unanimously, the Senate approved yesterday (06/14) the Proposed Amendment to the Constitution (PEC) 15/2022, which stimulates the competitiveness of biofuels against fossil competitors, and aims to maintain the differentiation of the tax burden on ethanol compared to gasoline. The text maintains benefits for clean energy sources for at least 20 years.

There were 68 favorable votes and none against in the first-round vote. In the second round, there were 72 favorable votes and none against. The matter now goes to the Chamber of Deputies.

Watch the Video Below and Understand How the PEC Can Help Curb Fuel Price Increases

The PEC is part of the project package aimed at curbing the rise in fuel prices. On Monday (06/13), the Senate approved the bill that sets a ceiling of 17% for the ICMS on fuels, electricity, and public transport services (PLP 18/2022).

Initiated by Senator Fernando Bezerra Coelho (MDB-PE), PEC 15/2022 provides for the creation of “a favored tax regime for biofuels,” which will be defined in a complementary law to be approved by the National Congress. According to the PEC, the rates on renewable sources should be lower than those for fossil fuels. The senator highlighted that the text “does not innovate, it merely maintains existing benefits” for clean fuels.

Biofuels PEC, Which Aims to Maintain the Differentiation of the Tax Burden on Ethanol Compared to Gasoline.

—  We need to maintain the attractiveness of ethanol. Today, we have a tax differentiation between gasoline and ethanol. The PEC is merely a constitutional command to maintain the current tax structure — Bezerra stated.

The rule should remain in effect for at least 20 years and will apply to the following taxes: Contribution for the Financing of Social Security (Cofins) paid by the company on revenue or sales and by the importer of goods or services from abroad; Contribution to the Social Integration Programs and the Public Server Heritage Formation (PIS/Pasep); and Tax on Circulation of Goods and Services (ICMS).

Until the complementary law comes into effect, the competitive differential of biofuels over fossil fuels will be guaranteed by maintaining, in percentage terms, the difference between the rates applicable to each fossil fuel and the biofuels that substitute them, at a level equal to or higher than that in effect on May 15, 2022.

When the competitive differential is not determined by the rates, it will be ensured by maintaining the effective tax burden differential between the fuels.

“The amendment now presented thus seeks to enshrine in the Constitution the competitive structure of biofuels that compete directly with fossil fuels in the country, maintaining a fair and current tax differential between these products. It also strengthens Brazil’s strategic position to seize the opportunities outlined by the low carbon“, justified Bezerra when presenting the PEC.

-by Senate Agency