Lula hugs Bolsonaro and throws clay in the oil – 03/03/2023 – Marcos de Vasconcellos

Over the past week, staunch liberals have publicly advocated for more taxes. The argument is that the withdrawal of taxes on fuel —made with pen strokes by Jair Bolsonaro at the rise in oil prices— would no longer be justified.

There is logic in the arguments, which forces us to remember that economics is a human science, not an exact one. Anyone who talks as if there is only one way is backed by fraud.

The PT government accepted the request, but doubled the bet. In addition to resuming the collection, it created another tax — for those who export oil. New taxes, however, usually result in imbalance.

Moments of imbalance create reckless movements in the financial market. No wonder the Ibovespa, the main indicator of our Stock Exchange, reached the worst score since December, in a fall driven by Petrobras.

What brought down the price of the oil company’s shares was the government’s interference, which, while returning with taxes, was pressuring the state-owned company to reduce the price of fuel.

The oil giant’s pricing policy is back in the Executive’s sights: Lula and Bolsonaro embraced. “Laws made wrongly back there tied the price of a barrel produced here to the price abroad, that’s the big problem”, said Bolsonaro, in 2022. fair (2).

The PPI (Import Parity Price) consists, in short, of selling gasoline and diesel produced here at the same price as imported products. And this needs to be clear: this is not just a comparison with the international price of oil. Fees and costs of freight, handling, storage and associated services are also considered, according to the ANP (National Agency of Petroleum, Natural Gas and Biofuels).

Before the PPI, put into practice in 2016, it was common for gasoline price adjustments to be made according to government analyzes of the impacts on inflation. The problem with this is electoral use, withholding increases at a high cost to the company. And don’t think you can’t break a giant. History has proven that bad management is punished.

Improving PPI seems better than doing away with it. Does it really make sense to charge as if we had international freight and storage costs for refined fuels here?

The creation of an Export Tax, instead of improving domestic prices, affects those who had nothing to do with the government emboldened in adjusting accounts.

The company that suffered most from the creation of this export tax on the Exchange is a private company, Prio (formerly PetroRio). Its PRIO3 papers took a tumble of almost 10% with the invention. It turns out that the company exports all of its production. And it’s not because of their own will, it’s because of the lack of the refineries they need in Brazil.

The company’s CEO, Roberto Monteiro, was keen to point out, in a recent interview, that the company never paid dividends and always reinvested its results. Now, he’s taken a lion bite.
Investors who exchanged Petrobras shares for Prio shares, seeking to shield themselves from government interference in the sector, had a bad surprise at the beginning of this year and mandate.

In tax law, there is a lot of talk about “throwing the clay, to see if it sticks”, which is when the government creates a tribute and waits for the fight to come. What you collect along the way “is profit”. If politics continues throwing mud, fixed-income and low-risk assets should remain the most attractive to investors.
It’s no use for the government to complain about interest rates and increase insecurity. It dictates the direction of the real economy and the financial market.

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