Senate will listen to governors over fuel taxes

tax fuels Senate President Rodrigo Pacheco. Photo: Leopoldo Silva/SF/CC-BY 4.0
Senate President Rodrigo Pacheco. Photo: Leopoldo Silva/SF/CC-BY 4.0

One day after the Brazilian House approved changes to how the state-level ICMS taxes on goods and services are calculated, Senate President Rodrigo Pacheco tempered expectations around the proposal’s speedy approval in the upper house. He told reporters that senators will consult state governors and municipal mayors — who oppose the move as it will cut their revenue.

“We cannot foresee which way the Senate will go, but given that this is a local levy we must listen to governors on the matter,” he said on Thursday evening. 

According to the bill passed by a massive House majority, ICMS taxes on fuels would no longer be based on a 15-day average of fuel prices. Instead, it will use a two-year average and be predetermined for an entire year, which House Speaker Arthur Lira claims could reduce prices at the pump by up to 8 percent.

As we explained in today’s Brazil Daily newsletter, the ICMS tax is the most important source of revenue for state administrations — which are already strapped for cash as it is. The Brazilian Federation of State Tax Auditors (Febrafite) believes states and municipalities will lose BRL 24 billion (USD 4.3 billion) in revenue per year.