States define single ICMS of R$ 1.45 per liter and put pressure on gasoline prices – 03/29/2023 – Market

The state governments reached an agreement to implement the single ICMS rate on gasoline, which was created in a law approved by the Jair Bolsonaro (PL) government but was being discussed at the STF (Federal Supreme Court).

In an agreement with Confaz (National Council for Finance Policy), they defined a rate of R$ 1.45 per liter, both for gasoline and for anhydrous ethanol that makes up the fuel sold at gas stations.

The value is much higher than that practiced in the second half of March, according to data from Fecombustíveis (National Federation of Retail Fuels and Lubricants). Currently, the highest ICMS on gasoline is charged in Piauí, R$ 1.24 per liter.

In São Paulo, the current rate is equivalent to R$ 0.89 per liter. With the change, there will be a difference of almost R$ 0.50 per liter.

Economists Andréa Angelo and Felipe Salto, from Warren Rena, calculate that the change could cause an average increase of 11.45% in the price of gasoline, with an impact of 0.5 percentage points on the projection of the IPCA for 2023.

According to them, the value of the new ICMS is equivalent to a rate of 27.5%, higher, therefore, than the 17% to 18% used as a ceiling for essential products. “So, it could be concluded that the essentiality would in fact be removed for gasoline”, they claim.

The price of gasoline already had a strong increase in the stations in early March, with the return of the collection of federal taxes on fuel. Last week, according to the ANP (National Agency of Petroleum, Gas and Biofuels), the product was sold, on average, at R$ 5.51 per liter.

The value is R$ 0.43 per liter, higher than that verified at the end of February, a high well above the R$ 0.26 estimated by the market — considering that the new rate is R$ 0.47 per liter and Petrobras cut its selling prices at R$0.13 per liter to minimize the increase.

The new rate goes into effect on July 1. It will be the only one across the country and charged in reais per liter —today, each state charges a percentage of the reference price defined every fortnight in surveys at gas stations.

The current model is criticized by the industry for feeding back price increases at refineries: after the increase in pumps, the states raise the reference price for charging the tax, generating a new transfer to the final consumer.

In addition, they say, it encourages tax fraud with the purchase of fuel in states where the ICMS is cheaper for clandestine sales in those with higher taxation.

The change was approved by Congress with the support of the Bolsonaro government in May 2022, but the states appealed to the STF. At first, there was an agreement on diesel, which will have the single rate in force from April 1st.

Also in this case, an increase in gas stations is expected, since the defined rate, of R$ 0.95 per liter, is higher than the current values. Consultant Dietmar Schupp, a specialist in fuel taxation, estimates that the value is R$ 0.13 higher than that in force in the first half of March.

The price of diesel will also be pressured at the beginning of the month by the increase in the mandatory percentage of the biodiesel mixture from 10% to 12%. The decision will lead to an average increase of two cents per liter, according to an estimate by the Ministry of Mines and Energy.