Tarcísio’s proposal limits IPVA exemption for electric cars and irritates the sector – 10/20/2023 – Market

The proposal sent this Friday (20) by the governor of São Paulo, Tarcísio de Freitas (Republicans), to exempt electric vehicles from IPVA angered automakers in the sector.

As anticipated in the Panel column, vehicles powered exclusively by hydrogen or hybrids with an electric engine and a combustion engine that use, alternatively or only, ethanol will be exempt from the tax. In this case, the value of the vehicle cannot exceed R$250,000 and the exemption will be valid for 2024 and 2025.

The text also proposes that buses or trucks powered exclusively by hydrogen or natural gas, including biomethane, will be exempt from paying the tax from January 1, 2024 to December 31, 2028.

ABVE (Brazilian Electric Vehicle Association) complains that the new project does not include electric cars without a combustion engine, only hybrid cars (which have an electric and combustion engine).

The sector claims that, after vetoing on the 17th a project on the subject approved by Alesp (Legislative Assembly of São Paulo), the governor harmed owners of electric-only vehicles, which pollute less.

“We have always treated the issue of electrification and biofuels as an added agenda. It is not one thing or another. Brazil has to participate with all technologies, effectively be the place to test all technologies from the most efficient point of view”, says Ricardo Bastos, president of ABVE.

For Bastos, the bill sent by the governor is a step backwards, choosing only one technology. “What we have been talking about with the government itself is that São Paulo can work with all technologies. The state is the largest producer of ethanol, biomass electricity and clean electricity.”

On the 17th, the governor justified his veto of Alesp’s PL 308/2023, based on considerations made by the Secretariat of Finance and Planning and Environment, Infrastructure and Logistics.

“According to the portfolio holders, the granting of tax incentives to achieve the legislator’s noble objectives must consider, among other aspects, the specificities of São Paulo’s energy matrix, fundamentally the diversity and abundance of energy resources available in the state originating from biomass .”

According to the veto, this point was not fully included in the parliamentarians’ project, since the expected tax exemption covered hybrid vehicles powered by exclusively gasoline engines, not considering the vigor of ethanol production and the prospects for biomethane production in the state.

“In addition, the Secretary of Finance and Planning noted that benefits of this nature can be operationalized in a simpler and faster way than through the granting of credit in favor of the taxpayer.”

In his veto, the governor also argues that the project does not provide an estimate of the budgetary and financial impact.

With an urgent request, the new project has 45 days to be processed by Alesp’s committees, but there is no guarantee that it will be voted on by the end of the year.

“It is inexplicable, from an environmental point of view, to exempt hybrid cars and not exempt electric cars, which pollute much less. [novo] project is a delay. Possibly, it responds to pressure from the old automobile industry, which is afraid of competition from trams”, says Alesp deputy Ricardo Donato (PT), author of the original project.

“We will work to include the exemption for electric-only cars again in the text, to see if we have the strength to do so”, says the deputy.

According to a survey carried out by Sheet, nine states and the Federal District already grant some type of benefit to owners of electrified cars. The rules vary for each federative unit.

When questioned, the state government reiterated the reasons for the veto and the differences between the projects. Also asked about the lack of mention of electric-only vehicles in the new project sent by the governor, the state did not comment until the publication of this report.