Confaz establishes rules for ICMS on gasoline and affects the war on inflation

Refueling the car with gasoline will be more expensive for the consumer from June 1, after a decision taken this Friday (31) in a meeting between the Ministers of the Federal Supreme Court (STF) André Mendonça and Gilmar Mendes and Secretaries of Finance.

The National Committee of Finance Secretaries of the States and the Federal District (Comsefaz) announced that the Tax on the Circulation of Goods and Services (ICMS) fixed on oil derivatives is now R$ 1.22 per liter. “This rate corresponds to 23% of the sale value”, says Tiago Sbardelotto, economist at XP Investimentos. Currently, the rate in most states fluctuates between 17% and 18%.”

The decision “throws gasoline” on the inflation fire, since the fixed amount is much higher than what the driver currently pays when filling the car’s tank. According to the National Federation of Trade in Fuels and Lubricants (Fecombustíveis), only in Piauí is more ICMS charged per liter (R$ 1.2419). The lowest value is in Goiás (R$ 0.8490).

Confaz wanted a higher rate

The new definition comes two days after the decision of the National Council of Treasury Policy (Confaz) that defined new rules for the ICMS charged on operations involving gasoline and anhydrous ethanol.

The rate for gasoline had been set at R$1.4527 per liter – corresponding to a rate of 27%, which would imply an impact of half a percentage point on July inflation.

Now, Sbardelotto projects that the reflection will be 0.25 percentage points in the June IPCA. He does not believe that the measure will be reflected in the definition of interest by the Monetary Policy Committee (Copom), since the BC’s analysis horizon is more focused on next year.

The economist estimates that the states will have a revenue gain of R$ 7 billion in 2023. The Confaz agreement helps offset part of the losses after the approval of Complementary Law (LC) 194, which determined that products and services such as fuel, energy electricity, telecommunications and public transport are considered essential. And for that they could not have rates higher than 18%.

Arm wrestling started last year

The dispute between governors and the Union began last year, in the midst of a scenario of sharp rise in prices. Accumulated inflation in 12 months reached its peak in April: 12.13%, according to data from the Brazilian Institute of Geography and Statistics (IBGE). Fuels and energy were among the main price villains. In the previous 12 months they had increased by 23.42%.

In this scenario, two complementary laws were enacted to try to contain the rise in prices. The first was LC 192, which in March standardized ICMS rates on fuel in the country. The second was LC 194, from June, which started to consider essential goods and services related to fuel and electricity. PIS/Cofins was also zeroed.

The measures were aimed at tackling the rise in oil prices, resulting from the restriction of supply caused by the conflict between Russia and Ukraine, in Eastern Europe. The impacts were positive. In July, after the institution of the laws, fuels were already 3.31% cheaper than in the previous 12 months. In 2022, they lowered 12.89%.

But the impact was felt by the coffers of the Federation Units, since the ICMS on fuels and energy represents up to a quarter of the total collection. The states and the Federal District appealed to the STF, questioning the Union’s measures, at the time under the management of former President Jair Bolsonaro (PL).

An agreement between the Union and the units of the federation was ratified in December by the Supreme Court. The main point reached in the conciliation was the maintenance of the essentiality of diesel, cooking gas and natural gas with uniform ICMS (equal in all states) and single-phase (charged in only one instance).

No consensus was reached on gasoline. “This still needs to be defined within the scope of the discussion forum”, says lawyer Gabriela Valle de Almeida Monroi, from Schneider Pugliesi Advogados.

Part of the states’ losses has already been resolved in an agreement with the Union, which, with the new government, has sided with them. On March 10, the Minister of Finance, Fernando Haddad, announced that he reached an agreement with the 27 governors to compensate for the loss of ICMS collection on fuel last year. The Union will disburse R$ 26.9 billion.

By complying with this legal requirement, states and the Federal District ended up choosing a higher ICMS rate, higher than those previously practiced. From 17% and 18%, which is practiced in most states, it goes to an average of 23%. Gasoline prices have already started to rise. In the first three months of the year, the increase is 5.09%, according to the IPCA-15.

Measures try to systematize ICMS collection

Researcher Thiago Buschinelli Sorrentino, from FGV Direito SP, says that the purpose of the agreement is to systematize the collection of ICMS on fuel.

In addition to the change in the form of charging the tribute, which is now fixed per liter, Confaz established that it will be done in just one phase.

According to the FGV researcher, the fact that the collection is single-phase facilitates inspection. If coming from abroad, the fuel will be taxed upon importation, and if produced in Brazil, at the beginning of the production chain.

The agreement also established that the rates must be uniform in all federation units. “Before, uniformity was not mandatory. Now it starts to serve as a point of reference for discussions on the subject”, says the lawyer at Schneider Pugliesi Advogados.

She also points out that the measure helps to provide more legal certainty, avoids the multiplicity of rules and the misalignment of practices.

New rates for diesel and LPG on May 1st

Another measure taken at the meeting between the finance secretaries and the ministers of the STF was the extension, for 30 days, of the entry into force of the agreement published by Confaz in December that established new rates for diesel and biodiesel (R$ 0.9424 per litre) and for LPG (R$ 1.277 per kilo). The measure should be valid from this Saturday (1st) and will enter into force on May 1st.

The decision partially meets the interests of the governors, who allege difficulties in implementing the measure and wanted it to take effect from July 1st. Companies linked to the fuel segment were also struggling to implement the new rules.

To avoid problems, state administrations are going to put together a contingency plan for issuing invoices for the purchase and sale of fuel. “It’s a paradigm shift that’s happening,” says Monroi.