The tax on fuel is different from the tax on goods and services; despite this, gasoline will be more expensive in February
The escalation of adjustments in the ICMS (Tax on the Circulation of Goods and Services) in 22 States will not affect the price of gasoline. As reported by Power360subnational entities are raising their rates to guarantee greater revenue during the transition period of the tax reform, which is under analysis in Congress.
Despite this increase in taxes, the price of gasoline will not be impacted by these fiscal maneuvers. In conversation with the digital newspaper, the executive director of downstream of IBP (Brazilian Institute of Oil and Gas), Valéria Amoroso Lima, said that the fuel tariff is different from the modal rate – which applies to the majority of products and services sold in each unit of the Federation. “Gasoline taxation is different, it is not ad valorem it is ad rem, real per liter”Lima said.
On March 31, the Confaz (National Finance Policy Council) defined a new rate for gasoline. The tax became single-phase – charged in a single stage of the chain – and with a uniform and fixed rate (ad rem) of R$ 1.22 per liter of gasoline. This new rule was adopted to make up for the loss of revenue caused by the liquidation of ICMS on gasoline last year to contain the increase in prices.
Unlike the charge on gasoline, the modal tax, which is being modified, is levied on a percentage (ad valorem) of services and goods. This percentage can vary in the States, which have the freedom to establish their own rates.
Even protecting gasoline, which has a strong impact on inflation, Lima warned that in this tax composition, Brazilians already pay a tax above what is charged in the general ICMS. This amount of R$1.22 per liter is equivalent to a tax rate of 23%. This percentage is higher than that charged in all States.
According to the survey of the Power360Piauí will have the highest rate when all proposed readjustments are completed with 21%, 2 percentage points above what the Brazilian consumer already pays for gasoline.
“Today’s rate on gasoline, which is a rate of reais per liter, is already a value above this modal rate, so this average rate that the States are increasing will not affect gasoline, diesel or LPG. , but the amounts we already pay for gasoline are above this rate”declared Lima.
Even though the ICMS adjustments do not directly affect the price of fuel, Brazilians should prepare to pay more for gasoline from February 2024. This is because the Comsefaz (National Committee of Secretaries of Finance, Finance, Revenue or Taxation of the States and the Federal District) has already updated the tax collection ad rem of gasoline.
In the 2nd month of next year, taxation will increase from R$ 1.22 to R$ 1.37 per liter. “In February this value will rise to R$1.37 per liter. Derivatives already have a rate above the average rate in the economy. The state with the most expensive rate will have a rate of 20.5%, but gasoline is already at 23% today”Lima said.
ICMS in the States
At least 22 states raised the ICMS rate before the approval of the tax reform on consumption, as found by the Power360. Data from Comsefaz (National Committee of Secretaries of Finance, Finance, Revenue or Taxation of the States and the Federal District) show that 11 units of the Federation have established a new tax rate that will come into effect in 2023:
- Acre;
- Alagoas;
- Amazon;
- Maranhão;
- For;
- Piauí;
- Paraná;
- Large northern river;
- Roraima;
- Sergipe; It is
- Tocantins.
In another 6 subnational entities, the new ICMS percentage will come into effect in 2024: Bahia, Ceará, Distrito Federal, Paraíba, Pernambuco and Rondônia. The Comsefaz list, however, does not yet include new States that will increase the modal rate – which applies to most products and services sold in each unit of the Federation.
On Monday (Nov 20), the Power360 showed that 6 states in the South and Southeast decided to increase the modal rate to 19.5% by pointing out the negative effect of the tax reform on consumption: Espírito Santo, Minas Gerais, Paraná, Rio de Janeiro, Rio Grande do Sul and São Paulo. For these units, the new percentage will be valid in 2024.
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