The government considers scrapping the MP on fuels to avoid clashing with Congress

Roberto Gardinalli/Futura Press/Estadão Contents
The interim measure was drafted in late February

Among the parliamentarians’ resistance to deputy for fuels, the Lula government is studying the possibility of the text failing, thus losing its validity, to avoid further clashes with Parliament. Signed by the President Luiz Inacio Lula da Silva (PT) last month, Provisional Measure 1.163/2023 restores the collection of federal taxes on fuels and establishes, for a period of four months, the tax on the export of crude oil, with immediate effect. However, if it is not voted by the House and Senate and does not become law within a period of four months, the text loses its force. As a result, the previous rule will go back into effect, which included an increase in federal taxes on gasoline and ethanol and an end to export taxes. For the government, the four-month case period is necessary until the Finance Ministry team presents the new fiscal rule. Likewise, the decision not to vote on the issue prevents changes to the text and, more than that, frees the Planalto Palace from testing its forces in the National Congress at a time when the government is still skating to create a solid base supportive.

Parliamentarians were heard from the website of New pan They say that the strategy is right, because “measuring forces” with the legislature, at this moment, could impose a defeat on the government. “It is easier to let it expire, it would be less political strain. The government does not have a majority in Congress,” said the deputy Jose Nelto (PP-GO). On the other hand, other congressmen see in the government’s alternative a maneuver by the Executive to increase federal revenues through new taxes, but without prompting spending cuts. MEP Carlos Sampaio (PSDB-PS) stated that there are “indications” of the Lula government’s disinterest in voting for the fuel deputy and thought that the validity period of the text (four months) coincides with the announced deadline for the temporary taxation on crude oil export and regeneration of fuels. “In other words, the government will no longer need the MP [após os quatro meses]. And bringing it to a vote without a solid base in the House of Representatives would be a high risk for the government, because Congress is unlikely to create or raise taxes. The government seeks to raise revenue by creating and raising taxes, not by cutting spending. And this is unacceptable,” he said.

presented by the minister Fernando Haddad (PT) on February 28, the Interim Measure imposes crude oil export taxation to raise revenue for a four-month period. According to the minister, the temporary taxation, at the rate of 9.2%, is a counter to the partial replenishment of FUEL Is from ethanol, in the amount of R$ 0.47 and R$ 0.02 per liter, respectively. If there was a full tax refund, the government claims that the increase in gasoline would be R$0.69 per liter, while ethanol, R$0.24. members of liberal party (PL), however, disputes the argument and claims that the imposition of the surcharge was “absolutely unconstitutional” and aimed at creating a new source of revenue. “Put simply: the government’s justification for imposing the export tax is exclusively fiscal, based on revenue, so that there is a very clear and unconstitutional use of an extrafiscal overriding leverage—with the softening of the Stone Clause of tax advantage. – for exclusively fiscal purposes”, says PL of Valdemar Costa Neto (PL) in the Direct Action of unconstitutionality (Adin) presented on Wednesday, 8 Federal Court of Justice (STF).

In the text, the caption also mentions that the Export Tax has “an exclusively collection purpose, distorting the constitutional purpose of the extrafiscal tax and in a maneuver to avoid, in a manner prohibited by CRFB/88, the incidence of the constitutional principle of tax priority” . The party requests that the export duty be suspended. “In the future, Brazil will also import derivatives paying an increased amount precisely because of the taxation at origin. It is evident that the importer of crude oil in the future will export to Brazil the derivatives plus the tax and the cascade effect that this will generate”, he concludes. In addition to resistance from PL, in the Chamber, the government may also face requests for significant changes in the text. Among them, an amendment presented by federal deputy Hugo Leal (PSD/RJ) proposes the complete exclusion of the article that determines the taxation of crude oil for the next four months. However, it is understood among the MPs that a Parliament initiative for discussion and analysis in the Temporary Measure should also not progress: “It would be harmful to the population, no one wants that”, the leaders said in the report. In this scenario, the natural path for the fuel MP is ostracism in the next four months, while the government tries to move forward with discussions on tax reform and the Ministry of Finance prepares the ground to discuss the country’s new fiscal rule.