Brasilia — The government began the week confident that the National Congress could approve a bill that converts increased oil revenues into reduced fuel taxes. However, pressure from the agribusiness sector to include demands such as the renegotiation of nearly R$ 200 billion in debt has stalled its progress.
The bill was ready to be put to a vote in the plenary session by the Speaker of the House, Hugo Motta (Republicanos-PB), but a senior source from the economic team admitted to NeoFeed that the negotiation has become "complicated" because the scope of the bill risks being significantly altered.
The proposal, authored by Congressman Paulo Pimenta (PT-RS), former Minister of the Secretariat of Social Communication of the Presidency, deals solely with using the extra revenue from oil to reduce PIS/Cofins and Cide tax rates on gasoline, diesel, ethanol, and biodiesel.
The government's position is to maintain the original content of the bill within the premise of fiscal neutrality and in accordance with the emergency agenda of the war in Iran. This would be yet another measure that the Executive is betting on to contain fuel prices amidst the surge in oil prices in the global market since the closure of the Strait of Hormuz in the Middle East.
On Monday, May 11, after leaving a meeting with President Luiz Inácio Lula da Silva (PT), Finance Minister Dario Durigan said he expected the bill to be voted on in both the Chamber of Deputies and the Senate this week. The government has also already issued provisional measures for subsidies to importers and producers of diesel and also for the import of cooking gas, in addition to taxing oil exports.
The agribusiness sector, in turn, argues that the proposed law should also include an extension or renegotiation of debts accumulated by rural producers due to the recent climatic effects of the last few years, such as the floods in Rio Grande do Sul, for example.
This specific climate crisis alone was the subject of a bill, which has already passed the Chamber of Deputies and is now in the Senate, whose rapporteur is Senator Renan Calheiros (MDB-AL), and which provides for R$ 30 billion in aid to farmers in Rio Grande do Sul through the Pre-Salt Social Fund. However, the Parliamentary Agricultural Front (FPA), better known as the rural caucus, has been working to include debts amounting to R$ 180 billion.
On Wednesday, May 13th, Senator Tereza Cristina (PP-MS), former Minister of Agriculture and who has been actively participating in negotiations seeking alternatives to debt in the agricultural sector, suggested an amendment to the bill that could leverage up to R$ 200 billion for the renegotiation of these debts.
The amendment authorizes the government to increase its participation in the Investment Guarantee Fund (FGI), with a projected additional contribution of up to R$ 20 billion. These funds would be used exclusively as collateral for rural debt renegotiation operations.
“This fund is what will leave a legacy for agriculture, if it is established. But the government has to understand that it is not enough to create the fund: we need to put resources into it. We know about the fiscal difficulties, the problem of credit and primary expenses, but R$ 20 billion in this fund can leverage more than R$ 70 billion, and could even reach R$ 200 billion,” highlighted Tereza Cristina today, during a session of the Senate's Committee on Economic Affairs (CAE).
This project, reported by Calheiros, is scheduled to be voted on in the CAE next Tuesday, May 19th. That same day, the rapporteur for the bill allocating oil revenues to reduce fuel taxes, Representative Marussa Boldrin (Republicanos-GO), is expected to present her report – this proposal is also scheduled for a plenary vote next week.
In addition to renegotiating rural debts, Marussa also intends to include in her report a provision so that biofuels (ethanol and biodiesel) receive the same tax breaks as gasoline and diesel, and therefore have tax parity with fossil fuels.
