Twelve states increase ICMS rates and fuel prices may rise

The general rates of ICMS (Tax on Circulation of Goods and Services) have already been readjusted in 12 states of the country since the end of 2022 and went from an average of 17% to 18% to up to 22%, according to a survey carried out by smart tech IOB .

The tax rate is mainly used to set fuel prices and has been frozen since the middle of last year, when two complementary laws established the general rate as a charging cap on services considered essential. Before the legislation, some states even charged up to 34% of ICMS on gasoline, as in Rio de Janeiro, for example.

With the readjustments approved by state legislatures since the end of last year, from one to four percentage points, the new general rates may cause price increases in fuels such as diesel, natural gas, cooking gas and gasoline – the latter, still, there may be more readjustments going forward, depending on a negotiation between states and the Union that will define whether it remains considered an essential product or not.

The new increases take effect between March 8th and April 1st. See below how the general ICMS rates are in the twelve states that have already approved the readjustments:

The reduction of ICMS and compensation from the federal government for the losses that the states had were the two main topics discussed at the meeting that the governors had with President Luiz Inácio Lula da Silva (PT) last week. They allege that the imposition of a collection ceiling caused a R$38 billion drop in tax collection, affecting states that are undergoing fiscal recovery, such as Rio de Janeiro.

During the processing of the laws that limited ICMS on fuel, electricity, transport and communications, congressmen included compensation by the federal government in the project. The device, however, was vetoed by then President Bolsonaro. At the end of the meeting, it was decided to create a commission at the Ministry of Finance to discuss a better alternative for the ICMS issue.

End of PIS and Cofins exemption may make fuel more expensive

In addition to the increase in general ICMS rates, the end of exemptions from taxes such as PIS and Cofins will also weigh on fuel prices as of March. The reduction in rates was established by former President Jair Bolsonaro (PL) and extended by President Luiz Inácio Lula da Silva (PT) until the end of February, to discuss a new price policy that is not so sensitive to international price variations. oil price.

Experts heard by People’s Gazette claim that a new extension of the exemption of these taxes may be taken by President Lula at the end of February, even to avoid an abrupt readjustment in fuel prices and, consequently, in inflation.

It is also possible, they say, that the government will try to advance a bill in Congress that creates a kind of fuel price stabilization fund, discussed since 2021 and which did not go through last year. The topic may return to discussion with the resumption of work in Congress this Wednesday (1).