BRASILIA, March (Reuters) – Brazil’s Finance Ministry on Wednesday proposed that states scrap the ICMS state tax on diesel imports, with the federal government covering part of the resulting revenue losses.
Speaking to reporters, Finance Ministry Executive Secretary Dario Durigan said the proposal would imply a revenue loss of about 3 billion reais ($576.89 million) per month through May, with the federal government compensating half of that amount.
The idea was floated earlier in a meeting with state finance secretaries, Durigan said, and will be deliberated at a new meeting scheduled for March 27.
Crude oil prices and fuels have surged during the U.S.-Israeli conflict with Iran.
Last week, the federal government already cut federal PIS and Cofins taxes on diesel and announced a subsidy for diesel imports, helping soften a price increase that state-run oil giant Petrobras would announce the following day.
Diesel is a key input in Brazil’s logistics chain, which is heavily dependent on road transport, and the country needs to import roughly 25% of the fuel it consumes.
Durigan said the government has been monitoring reports of abusive price increases amid the rise in oil prices.
He announced an agreement with the majority of Brazilian states to allow real-time monitoring of fuel sales invoices with the National Agency of Petroleum, ANP.
Durigan said the agreement remains open for other states to join, noting that Amazonas, Mato Grosso, Alagoas, Santa Catarina, Parana and Sao Paulo — the country’s most populous and economically significant state — have also not yet signed on.
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