Find out why the high dollar, and not the ICMS, explains the soaring

The soaring price of fuel, with gasoline reaching more than R$7 in some states, affects not only the pocket, but the livelihood of thousands of Brazilians. In the Federal District, where the price of regular gasoline at the pumps is being sold at R$ 6.69 a liter, the application driver Marcos Loureiro even evaluates it to stop driving through the streets of Brasília because the business is no longer sustainable.

To Brazil in fact, he says that, like him, drivers in the capital refuse most of the races because “they are not worth it”. Only higher value races, when the price is dynamic, compensate for the displacement.

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“Today [24] in the morning, for example, out of 10 races that arrived, I accepted only one. Only when the price is dynamic you have a chance to earn something,” he laments. A law student, Loureiro works as a driver of transport applications that he can continue his studies and find a good job in the future.

“I’ve thought about stopping driving as an app driver, but I depend on work. If I don’t stop, I’ll have to change my schedule. Running during the day doesn’t pay anymore, it’s better at night. Paying for gas at almost R$ $7 is too hard.”

In recent months, gasoline has accumulated an increase of 37%, according to the Brazilian Institute of Geography and Statistics (IBGE). On the internet, the topic is one of the subjects that most arouse people’s interest. According to Google, the term price associated with the word gasoline are the most searched on the search engine at least since the beginning of this year.

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In addition to interest, it became a fact of political discussion. Supporters of President Jair Bolsonaro in the networks, evoking their own idol, blame the price on governors, because of the incidence of a state tax, the ICMS, on fuel. It so happens that, in addition to not being exactly the cause of the increase, the ICMS on fuels has remained practically at the same levels over the last few years.

For Professor Edmar Almeida, a researcher at the Institute of Energy at PUC-Rio and a professor at the Federal University of Rio de Janeiro (UFRJ), the stratospheric fuel price factor is the high dollar exchange rate.

“Brazilians are discussing the fever, but they don’t want to know what is causing the famine fever, the price of gasoline, meat, and all the prices that tend to follow the international price. The big problem is the dollar, which has arrived at a high level, at times approaching R$ 6 reais,” he says.

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The US currency is currently quoted at R$ 5.25, in the case of the commercial dollar, used in business transactions. The tourism dollar, used in travel, is easily surpassing the barrier of R$ 5.50 in exchange offices.

In Brazil, Petrobras, the main company in the fuel sector, adopts a pricing policy that follows the international variation of the dollar and the barrel of oil. Before the pandemic, the price of a barrel of oil was 80 dollars, fell to 20 dollars at the height of the health crisis, between April and May of last year, and has been recovering over the last year, now fixed at the 65 dollar range . Value, however, lower than the period before the pandemic, even with the price of fuel in an incessant escalation of increase.

“Between 2011 and 2014, the price of a barrel of oil was, on average, in the range of 100 dollars. Almost 10 years later, we are at a much lower price. The problem with fuel prices is one of disorganization in our macroeconomy. it is the macroeconomics of Brazil”, adds Almeida.

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The most emblematic example of this scenario is the accumulated super devaluation of the Brazilian currency in the international market. In 2020, for example, the real accumulated almost 22.4% of fall against the dollar, becoming the 6th currency that devalued the most against the dollar last year, according to a survey by Austin Rating consultancy. The Brazilian currency was only behind the currencies of Venezuela, Seychelles, Zambia, Argentina and Angola. Earlier this year, the devaluation worsened and Brazil ranked 4th among the most devalued currencies, losing to countries like Argentina, Mexico and even very poor nations like Haiti and Liberia.

ICMS is not a villain

In Brasília, the Government of the Federal District (GDF) decided to send the Legislative Chamber a bill (PL) that provides for a reduction in the ICMS rate charged on fuels. The proposal is that the values ​​fall three percentage points in three years, starting in January 2022, dropping from the current 28% to 25% by 2024, in the case of gasoline. And from 15% to 12%, compared to diesel. According to the text of the PL, over the next three years, the district government would give up tax revenue of more than R$ 345.4 million, which would be the lowest ICMS rate practiced in Brazil, which is between 25% and 34% currently.

The measure is still a reaction by Governor Ibaneis Rocha (MDB) to the pressure that Bolsonaro has been putting against state managers, in an attempt to transfer responsibility for the rise in prices. After hosting a meeting of the Forum of Governors, this Monday (23), the head of the Executive in the DF reacted to the president.

“There were nine fuel readjustments. This is generated by the political instability that Brazil is going through, which makes the dollar reach almost R$ 6 and pushes the price of fuel. We need an environment of harmony, where entrepreneurs can work and we can attract international investments,” said Ibaneis.

According to professor Edmar Almeida, from UFRJ and PUC-Rio, president Jair Bolsonaro disseminates misinformation to prevent the cause of the problem from being revealed. “This is a smokescreen. There was no increase in ICMS during the pandemic, so you can’t attribute the increase to that. Gasoline could be at a much lower price if the dollar were in the range of R$3.50 to R$4 . Brazil is losing enormous energy in the discussion. We had an average devaluation of 30% of the real against the dollar in recent years. This all had to do with the economic policy adopted.”

Source: Federal District BdF

Edition: Marcia Silva

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