June 30, 2022

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Senate Committee Approves Oil Export Tax Act, Changes Petrobras Pricing Policy |  Policy

Senate Committee Approves Oil Export Tax Act, Changes Petrobras Pricing Policy | Policy

a Senate Committee on Economic Affairs (CAE) This Tuesday approved a bill, authored by Senator Ruggiero Carvalho (PT-SE), that changes Petrobras fuel pricing policyEstablishing a crude oil export tax and a domestic price stabilization fund. Despite agreeing to the merits of the proposal, the government-allied base attempted to postpone the discussion again, but failed. The proposal will now be analyzed by the Senate plenary.

The project was created in response to the so-called import parity price policy (PPI), which links the price of oil to the international market based on the price of a barrel of Brent crude, calculated in dollars. Since 2016, this policy has been used by the state-owned company, therefore, the international value of oil and the dollar price directly affect the price formation of the company.

In practice, the project creates a mobile contrast band for oil products as a fixing tool, financed by the creation of an export tax on crude oil. When prices are low, the resources corresponding to the difference between the market price and the minimum range are pooled.

In the opposite case, when prices are above the upper bound, resources are used in order to keep prices within the range. The rapporteur considers that the proposal is a kind of “saving” or consumption of prices, which will help contain the rise in fuel prices in the national market.

According to the text, the value of crude oil will be tax-free if it costs up to $45 a barrel. In the event that the barrel price reaches a price range between $45 and $85 per barrel, the tax should be applied at a minimum rate of 2.5% and a maximum of 7.5%. This same tax could rise to 7.5% or 12.5% ​​if the value of crude oil changes between $85 and $100 per barrel. Finally, the price can fluctuate between 12.5% ​​and 20% if the value of crude oil exceeds $100 per barrel.

“Considering that because it is marginally applicable, the price will not apply to all amounts, but only to the portion of the price that exceeds the stated amounts. For example, at an updated value of $75, a shipment will result in a payment of $0.5 to 1.5 US dollars per barrel, i.e. 0.6% to 2% of the invoiced amount. This percentage is much lower, for example, than the difference between the prices of Brent oil (reference) and the prices of the most exported oil by the National Petroleum Agency (ANP) in Brazil” , explained Jean-Paul Prates in the text.

His opinion also states that legal entities that allocate part of their production to refining in the domestic market may receive different rates on exports, depending on the regulations. The economic team rejects the idea of ​​establishing an export tax. At a public hearing held at CAE itself, a few days ago, the Executive Secretary of the Ministry of Economy, Marcelo Guaránez, said the tax could have “very little impact” on higher gasoline prices. In his estimation, the tax on crude oil exports tends to discourage investments in the country.

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For this reason, the senators allied to the Planalto Palace attempted to postpone the discussion of the bill to a later session. They have requested a new public hearing on the matter, which has already been done. “We have to bring in the government, and have a public hearing between the parties. The legislature is advancing, the Senate is debating, creating alternatives, tools, but this even affects a line of thought in government, a government with a liberal economy, the free market. And suddenly, you’re drawn to another faction, Another concept of governance, said Senator Zikenha Marinho (PSC-PA).

Marinho admitted, however, that the project was “merited” and “important”. “The project is all we need at this moment of crazy prices. You can’t survive. The vast majority of the population doesn’t earn as well buying fuel as it is.”

Other senators also agreed that the Bolsonaro administration was “missing”. “The government is passively watching the rise in fuel prices,” said Senator Carlos Portinho (PL-RJ). “We have to agree [esse projeto], at least, let’s say we weren’t silent. Let’s expand this source of funds to avoid this shame. Who wants to improve it,” added Senator Espiriau Amin (PP-SC). However, as part of an agreement, Senator Jack Wagner proposed a new public hearing on the matter in the Senate plenary, which was approved by the government.