Lula asked that diesel prices be lower in 2023 – 05/06/2023 – Market

The Ministry of Finance planned to raise the federal tax rate on diesel by R$ 0.16 per liter starting in September, but President Luiz Inácio Lula da Silva (PT) asked that the tax be lower, just enough to fund the program to encourage the purchase of cars, buses and trucks.

Thus, the charge will be R$ 0.11 per liter, as announced by Minister Fernando Haddad (Finance) this Monday (5). The rate will come into force in 90 days from the publication of the MP (provisional measure).

In recent days, different government interlocutors have privately informed that the partial re-encumbrance on diesel later this year would yield an extra R$3 billion in revenue.

The value would be double the estimated impact of the incentive program for the automobile industry designed by the MDIC (Ministry of Development, Industry, Commerce and Services), which is R$ 1.5 billion.

Haddad’s intention was to use the other R$1.5 billion to reduce the government’s primary deficit, which is estimated at R$136.2 billion for this year, according to the last assessment made in May.

This Monday (5), however, Lula met again with Haddad, vice president Geraldo Alckmin (PSB), who also heads the MDIC, and with the chief minister of the Civil House, Rui Costa, to discuss details of the program.

According to interlocutors, the petista asked that the reeneration be lower, as he did not want the collection obtained on diesel to be above what was necessary to compensate for the incentive for cars. Fuel taxation has been a politically sensitive topic for the Lula government, with clashes between the political and economic wings on more than one occasion.

With the rate of BRL 0.11 per liter, the Treasury foresees a total extra collection of BRL 2 billion, of which BRL 1.5 billion still this year and BRL 500 million in 2024.

As of January, the expectation is to resume the full rate on diesel, around R$ 0.35 per liter.

Shortly after taking office in his third term, Lula edited an MP extending the tax exemption on fuels adopted by Jair Bolsonaro (PL) in an election year.

The maintenance of zero rates on gasoline and ethanol lasted two months, and there was already a partial reenactment in early March. In the case of diesel, the benefit would extend until the end of this year, with resumption of charges only in January 2024, in the amount of R$ 0.35 per liter.

In the midst of discussions on how to offset the package for cars, Lula authorized the anticipation of the diesel re-encumbrance, albeit partially. On Thursday (1st), Haddad reported that the compensation measure for the program had already been decided and validated by the president, but he did not detail what it would be.

“Everything is well delimited, and the president validated the source to finance without any disengagement from this year’s fiscal targets,” he said at the time.