The Federal Senate approved this Wednesday (12) the basic text of a project that allows the government to use extra revenue from the sale of oil to reduce taxes on fuels. Senators still need to analyze a highlight made in the proposal. The text now goes to President Luiz Inácio Lula da Silva (PT) for sanction, as it has already been approved by the Chamber of Deputies. ? The proposal also grants subsidies, in the form of reduced taxes, for the fertilizer industry and the critical and strategic minerals sector. The exemption will still be valid for the Women's World Cup, which will be hosted in Brazil in 2027. The text, which initially only dealt with fuels, received a series of devices unrelated to the topic, the so-called tortoises. ? The war in Iran contributed to an increase in the cost of fuel, as well as inputs for the national production chain, such as fertilizers.
Senate approves basic text of project that reduces fuel prices with money from rising oil prices and expands spending outside the ceiling
The Federal Senate approved this Wednesday (12) the basic text of a project that allows the government to use extra revenue from the sale of oil to reduce taxes on fuels. Senators still need to analyze a highlight made in the proposal. The...
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The proposal also grants subsidies, in the form of reduced taxes, for the fertilizer industry and the critical and strategic minerals sector. The exemption will still be valid for the Women's World Cup, which will be hosted in Brazil in 2027.
- The text, which initially only dealt with fuels, received a series of devices unrelated to the topic, the so-called tortoises.
- The war in Iran contributed to an increase in the cost of fuel, as well as inputs for the national production chain, such as fertilizers.
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At the same time, the international scenario also generates appreciation for oil and gas extracted in Brazil. The objective of the project is precisely to cushion the losses of these affected sectors using the extra income obtained from the sale of Brazilian oil. However, for this to be possible, an exception to these measures needed to be created through this proposal. This is because the Fiscal Responsibility Law (LRF) and the Budget Guidelines Law (LDO) prohibit the granting of tax benefits without indicating the source to compensate them and the impact they will have on the government's accounts. The LDO even says that the "enlargement, extension or extension of tax expenditure" and the creation of new mandatory expenses are prohibited. The project, therefore, bypasses the norm in 2026. The inclusion of benefits to sectors, in addition to strategies for electoral purposes that are of interest to the government, is usually approved in an election year in Congress. In 2022, months before the elections, Congress approved a PEC that authorized a "state of emergency" in the country, to allow the government of then president Jair Bolsonaro to create a series of benefits on the eve of the elections. Fuel pump at a gas station in Brasília March 7, 2022. Reuters Fuel taxes Under the proposal, the government will be able to reduce taxes on fuel and compensate for the loss of revenue with the extraordinary increase in revenue obtained by the Union due to the international rise in oil prices. To do this, you can use royalties, special participations from the Union arising from the results of oil or natural gas exploration, taxes collected by the oil and gas sector and dividends from state-owned companies linked to the segment. According to the text, the reduction in federal taxes will be used in the import, production and sale of road diesel oil, biodiesel, gasoline, ethanol and aviation kerosene. To maintain the competitiveness of biofuels, the proposal determines that any tax reduction granted to gasoline preserves the competitive advantage of ethanol. If federal taxation on gasoline is reduced by 30% or more, the rates on ethanol must be reset to zero. Furthermore, the government is authorized to grant subsidies to ethanol producers to compensate for any losses in competitiveness. For the period between May and August 2026, the opinion provides for a subsidy of up to R$1.2 billion for the sector. The proposal also authorizes ethanol producers to use Pis/Pasep and Cofins credit balances and grants tax credit to projects aimed at producing fertilizers and their raw materials in Brazil.