Lula’s government should anticipate diesel re-encumbrance to afford a discount on cars and trucks – 06/03/2023 – Market

The government of Luiz Inácio Lula da Silva (PT) is expected to announce in the next few days the partial resumption of taxation on diesel starting in September.

The measure should yield approximately BRL 3 billion in new revenues in 2023, which will be used to offset the fiscal impact of the program to encourage the purchase of cars, trucks and automobiles.

The information was anticipated by the G1 portal and confirmed by Sheet.

Shortly after taking office in his third term, Lula edited an MP (provisional measure) 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 midst of discussions on how to offset the package for cars, Lula authorized the anticipation of diesel re-encumbrance, albeit partially. This means that the full rates will not go back into effect at once.

The charge will only be valid from September onwards because an increase in this type of tax needs to follow the so-called novena, a period of 90 days between the publication of the act and its application in practice.

On Thursday (1st), Minister Fernando Haddad (Finance) reported that the compensation measure for the program had already been decided and validated by the president, but 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.

In recent weeks, the relief in market conditions and the announcement of a change in Petrobras’ pricing policy have contributed to reducing the pressure on fuels. There is an expectation that this situation will mitigate the impact of the partial return of taxes on pumps.

The resumption of rates will compensate for the loss of revenue of approximately R$ 1.5 billion expected with the incentive package for the purchase of cars, buses and trucks.

The formulation of a program to encourage the purchase of cars up to R$ 120,000 was announced on May 25 by Vice President Geraldo Alckmin (PSB), who is also Minister of Development, Industry, Commerce and Services. At the time, he said that discounts on final prices would be between 1.5% and 10.96%.

In recent days, the program was redesigned, and the direct exemption of taxes gave way to a new model. As shown to Sheetthe government will grant a tax credit to automakers that sell vehicles with discounts to consumers, as agreed with the government.

Under this design, the consumer will have a price reduction, and the amount of the discount applied will be converted into credit for the automobile industry to use, in a second moment, to deduct taxes due to the Union.

The granting of credit will be conditioned to the application of the discount in the invoice.

According to members of the government, the benefits will be granted up to the limits of R$ 500 million for cars, R$ 300 million for buses and R$ 700 million for trucks. The figures will work as a kind of lock: when the credits reach that amount, the government incentive will be terminated.

For the consumer, the effect will be a discount of between R$2,000 and R$8,000 on the purchase price of cars.

The lower the price of the vehicle, the greater the discount tends to be. The cheapest models, which currently cost around R$ 70,000, should have the biggest discount, of R$ 8,000 (between 11% and 12% of the full price, a percentage close to that intended by the MDIC). A model that costs BRL 120,000 should have the lowest benefit (BRL 2,000).

In the case of trucks, the discount could reach around R$ 90,000, but it will be conditioned to the disposal of another truck with more than 20 years of use. The same limit should apply to buses.