Popular car: Government announces plan; understand – 06/05/2023 – Market

Eleven days after announcing the creation of a program to encourage the purchase of cars, the government of Luiz Inácio Lula da Silva (PT) formalized the launch of the policy with a broader scope and confirmed the partial resumption of taxation on diesel to offset the tax waiver.

The rate on fuel, which would be zero until December 31, 2023, will rise to R$ 0.11 from September, after the so-called ninety – 90 days in advance required to apply a tax increase.

The measure should generate approximately R$ 3 billion in new revenues this year. They will be used to offset the R$ 1.5 billion cost of the automaker incentive program.

Initially, the focus of the policy was on cars priced at up to R$120,000, but in recent days the government has decided to include trucks and buses as well. “We understand that it is a transitional measure, just four months, until the interest rate drops”, said vice-president Geraldo Alckmin (PSB), who is also minister of Development, Industry, Commerce and Services.

The formulation of a program to encourage car purchases was first announced on May 25 by Alckmin.

At the time, however, the program was not yet fully closed – as a result, sales collapsed waiting for discounts.

At first, the Mdic informed that the reduction in final prices would be between 1.5% and 10.96%. After conversations with the Ministry of Finance, however, the program was redesigned, and the direct exemption of taxes gave way to a new model.

The government will grant a tax credit to automakers that sell vehicles with discounts to consumers. 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.

For the consumer, the effect will be a discount of between R$2,000 and R$8,000 on the car purchase price. According to Alckmin, this represents a discount between 1.6% and 11.6% in current values. “The discount will be in cash,” he said.

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.

The lower the price of the vehicle, the greater the discount tends to be. The cheapest models, which today cost around R$ 70,000, should have the biggest discount, of R$ 8,000 (11.6%). A model that costs BRL 120,000 should have the lowest benefit (BRL 2,000, or 1.6%).

In the case of trucks, the discount may range from R$ 33,600 to approximately R$ 99,000, but will be conditioned to the disposal of another truck with more than 20 years of use. The same limit should apply to buses.