(Reuters, 6.Feb.2020) — Brazil’s President Jair Bolsonaro said he is prepared to eliminate federal fuel taxes if state governors eliminate the “ICMS” state tax on gasoline and diesel.
ICMS is a tax on sales and services and applies to the movement of goods, transportation, communication services and other supplies.
Earlier this week, Bolsonaro said the government would send a bill to Congress to change the ICMS tax on fuel, saying recent price cuts at oil refineries by Petrobras had not been reflected at the pumps.
“I’ll eliminate it federally if they do the same with the ICMS. That’s the challenge,” Bolsonaro told reporters in Brasilia, responding to them reminding him that, according to state governors, most fuel tax is at the federal level.
Bolsonaro this week said state governments were to blame for fuel prices at the pump not coming down. He said in a post on Twitter that “governors charge an average ICMS rate of 30% on the average price of gas at the pumps” to boost state revenues.
This week, 23 state governors out of 27 signed a letter rejecting Bolsonaro’s bill proposal, saying the issue needs to be dealt with in a “responsible” manner and in the appropriate forums, and noting that consumption taxes were not set at the federal level.