The prices of diesel, gasoline, and cooking gas will increase by about 12.5 percent from this Thursday, due to the adjustment of the ICMS state goods and services tax.
This increase was decided in October 2023 by the national committee of state finance secretaries and is the first adjustment of the ICMS on fuels since 2022. At that time, a law unified this tax throughout Brazil and established a minimum period of one year until the first rate change. After this time, revisions can be made every six months.
According to the agency, the adjustment is a way to compensate for inflation. The low revenue from the states also required compensation from the federal government. The lower value of fuel, on the other hand, contributed to the mid-monthly IPCA-15 inflation index, reaching its lowest rate for the month of January in five years.
Cooking gas distributors criticize the amount of the increase set by the committee. They claim that in 18 states cooking gas cylinders now have a tax rate equivalent to more than 18 percent of the price of the product.
Another change made in 2022 occurred in the tax collection model, which now has rates in Brazilian reais per liter or kilo, and no longer as a percentage of the estimated final price.
In the case of gasoline, the tax will now increase from BRL 1.22 per liter to BRL 1.37. Thus, the average price of the product in the country goes from BRL 5.56 to BRL 5.71 per liter, taking into account the price survey of the National Oil Agency.
In the case of diesel, the increase was from BRL 0.94 to BRL 1.06, which brings the value of a liter close to BRL 6. In the case of cooking gas cylinders, the tax goes from BRL 1.25 to BRL 1.41 per kilo, hindering the federal government’s desire to keep the average cylinder price below BRL 100.
Changes in taxation by the federal government have also affected fuel prices in Brazil. In 2022, then-President Jair Bolsonaro, who was running for re-election, zeroed out taxes on these products amid rising prices due to the war in Ukraine.
In 2023, the government of Luiz Inácio Lula da Silva began to gradually reinstate the taxes. Most recently, at the beginning of this month, it resumed social security contributions on diesel. However, state-controlled oil firm Petrobras managed to reduce the price of diesel sold in its refineries at that time, avoiding increases for the end consumer.
Now, however, industry experts say there is little room for refiners to cut prices. The international price of oil has risen recently amid conflicts in the Middle East and signs of an accelerating U.S. economy. In addition to international rates, Petrobras also considers factors such as internal production costs in its current pricing policy.
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