Government will tax oil exports to offset partial resumption of fuel taxes – 02/28/2023 – Market

The government of Luiz Inácio Lula da Silva (PT) decided to institute a tax of 9.2% on crude oil exports. The measure will last for four months, starting March 1.

The charge was announced by the Ministers of Finance, Fernando Haddad (PT), and of Mines and Energy, Alexandre Silveira (PSD), as a way to compensate for the loss of government revenue with the partial reinstatement of federal taxes on gasoline and ethanol. .

The government would have a frustration of R$ 6.6 billion in its revenues with the decision on fuels. With the institution of the tax on oil exports, the forecast is to collect R$ 6.66 billion.

“The MME carried out an analysis on the recommendation of the Civil House and decided to recompose the difference for the next four months by applying the tax on the export of crude oil”, said Haddad in an interview with journalists this Tuesday (28).

The export tax is a regulatory tax, that is, it is used by the government to stimulate or discourage a certain activity. Due to this characteristic, the tax rate can be changed at any time, without the need to give notice of 90 days or one year, as in other cases.

The Minister of Finance said that, although the expectation of collection is significant for the Union, the payment of the tax will represent a small portion of the profit of some companies in the sector.

“Our estimate, made here by the Treasury, to be confirmed by the results, is that this will represent something around 1% of Petrobras’ profit”, said Haddad.

Minister Alexandre Silveira, in turn, said that the taxation of exports could even stimulate new investments in the refining area in the country, since companies would have higher costs in foreign sales of crude oil.

“The export tax meets the technical interest of the Ministry of Mines and Energy,” he said.

After the announcement of the measures, Haddad met with allied leaders in Congress and the Minister of Institutional Relations, Alexandre Padilha (PT).

On leaving the meeting, Padilha defended the combination of measures as a “responsible way” to minimize the impact of the resumption of taxes on consumers.

“The temporary tax with taxation on those who export crude oil, that is, that export that is made without generating processing, development, without generating jobs, technological investment in our country, we are making this taxation to take this resource and reduce the impact of the increase in gasoline prices, in order to maintain the exemption of diesel oil and gas”, said the minister.

“The four-month period was defined by the technical team, by the economic team, considering that this is an adequate period to analyze the impact of this measure”, added Padilha. According to him, during this period, the government should also debate “a review of the way Petrobras had been building its prices in the previous government”.

The IBP (Brazilian Institute of Oil and Gas), the main representative of the sector in the country, said in a note that it views “with great concern” the institution of the export tax on oil.

“Oil exports are the third most important item in the Brazilian trade balance, being responsible for a surplus of US$ 65 billion in the last four years. Thus, the taxation of foreign sales, even temporarily, can impact the competitiveness of the country. country in the medium and long term, in addition to affecting the national credibility regarding the stability of the rules”, says the entity.

“The creation of this new tax also affects the prospects for an increase in oil production, since the product will be burdened and will suffer greater competition from countries that do not tax the commodity”, added the IBP. According to them, the measure could lead to delays or even the cancellation of investments in exploration and production.