Government details fuel taxation this Tuesday – 02/28/2023 – Market

The government will detail this Tuesday (28) “all the measures” for fuel taxation after the end of the exemption, said the Minister of Finance, Fernando Haddad, after a meeting on the subject with President Luiz Inácio Lula da Silva ( PT).

“We’re just waiting for some definitions from outside the Ministry of Finance,” Haddad told journalists after the meeting with Lula, the president of Petrobras, Jean Paul Prates, and the ministers of the Civil House, Rui Costa, and of Mines and Energy, Alexandre Silveira, at the Planalto Palace.

Haddad initially said that the details would be presented at 5 pm, but the Ministry of Finance later informed that the minister would grant a press conference at 7 pm, accompanied by Silveira.

The Ministry of Finance announced the day before that the government will resume charging federal taxes on fuel this week after the end of the exemption period, which ends on Tuesday, but did not disclose details, such as the rates.

According to the folder, the collection will be recovered by 100% with the return of taxation. As was the case before the exemption, fossil fuels will be charged more than biofuels.

According to the ministry, the decision follows the government’s strategy of being based on the principle of environmental sustainability, in addition to recovering federal funds. The folder also said that the measure also preserves the consumer, but did not go into detail about how the recovery of taxes will be made.

The return of taxation represented a tactical victory for Haddad amid a dispute of views between the economic team and wings of the government and the PT, which see the reinstatement as unpopular and inflationary.

Haddad had been defeated in January when President Lula decided to renew the exemption that had been initially granted by the Jair Bolsonaro government.

The reduction of fuel prices by Petrobras with a margin opened by the current situation is one of the possibilities under discussion to compensate for the reencumbrance, sources told Reuters.

Before the PIS/Cofins exemption, taxes on gasoline were R$0.79 per liter. Ethanol, which had a tax differential that gave it an advantage over fossil fuel, had a charge of R$ 0.24 per liter.

With the full reinstatement, the economic team will have an increase of approximately R$ 29 billion in the federal coffers in 2023. The measure is part of the set of actions in the folder’s spreadsheet to seek a reduction of the primary deficit this year to less than R $100 billion.

In addition to ethanol and gasoline, the MP signed by Lula in early January also extended until February 28 the exemption for vehicular natural gas and jet fuel.

The MP in force also provides that the exemption from taxes for diesel and cooking gas will be valid until December 31 of this year.