Fuel taxation exposes contradictions of the PT government

The impact as of tomorrow (1st) of President Luiz Inácio Lula da Silva’s (PT) decision to return to collecting federal taxes on fuel will not only be on pump prices. For base and opposition politicians, the risk of political attrition has not yet been fully dissipated, even with the search for alternatives to mitigate the readjustments, using Petrobras cash or staggering the encumbrance.

The biggest public opponent of the measure, PT president, deputy Gleisi Hoffmann (PT-PR), classified the return of taxation as a breach of Lula’s campaign commitment. Despite the fact that the theme did not appear in the publicity of the PT candidate, her interpretation takes into account the promise to bring relief to the population’s pockets after the increase in high prices in recent years.

“We are not against taxing fuel, but doing so now is penalizing the consumer, generating more inflation,” she said on Twitter on Friday (24).

Federal taxes were zeroed by the government of former President Jair Bolsonaro (PL) last year, as part of a strategy used by other countries in the world to contain inflation. The PT had called the measure populist and electoral, in favor of the highest income group in the country and against the environment.

Gleisi defended that the return of taxes would only occur after Petrobras changed its pricing policy, which today is linked to changes in the international market. Depending on the next decisions of the Lula government, the state-owned company will end up serving the purpose of moderating the effects to be felt in the coming days.

The Minister of Finance himself, Fernando Haddad, said on Monday night (27) that the oil company could use a “cushion” formed by the difference in favor of domestic gasoline over the value of imported gasoline to contain the encumbrance and consumer readjustments.

Haddad has been under friendly fire in recent days given the prospect of a rise of R$0.69 per liter of gasoline and R$0.24 per liter of ethanol, according to studies by the Brazilian Association of Fuel Importers (Abicom). These values ​​should change according to the rules to be detailed by the government, with the intention of increasing the tax burden more on fossil fuels (gasoline and diesel) than on renewables (ethanol).

Opposition sees government’s exclusive focus on tax collection

The leader of the opposition in the Senate, Rogério Marinho (PL-RN), believes that the episode about the decision to apply or not taxes on fuels shows a radical difference in vision on fiscal matters between the current government and the previous one. “Bolsonaro’s administration reduced taxes on 4,000 products and even so increased revenue,” he points out.

He assesses that, in two months of PT management, the alternative chosen by the PT was in the opposite direction, increasing taxes, “setting a fiscal bomb of R$ 200 billion” – a reference to the fiscal deficit forecast for the 2023 Budget – and “swelling the public machine with political allies without technical criteria”. “We’ve already watched this movie and it doesn’t have a happy ending”, he commented.

Senator Luís Carlos Heinze (PP-RS) made an analysis in the same direction, stressing that the government gave, with this decision, new evidence that “it does not understand how the wheel of the economy turns”. For him, increasing the cost of fuel now will boost inflation and, by extension, will sacrifice the population, in addition to making vulnerable citizens “eternally dependent” on welfare.

Financial market analysts feared that Lula’s delay in deciding whether to follow the Finance Minister’s advice or give in to the appeals of his government’s political wing would result in Haddad’s weakening after just two months in office. In addition to this pressure, the head of the economic team was responsible for delivering, by April, the proposal for a new fiscal anchor, replacing the spending ceiling, and proposing a tax reform.

On the Treasury side, the expectation is that the return of revenue from taxes on fuel, reducing the high fiscal deficit this year by around R$ 30 billion, will also join a retreat in inflation due to the weakening of economic activity, to that the return of the federal tax occurs without major scares. If that happens, Haddad will be able to continue with his still unpredictable plan to rebalance the public accounts.