Talks have also begun to increase emergency aid, plans are underway to increase gas voucher
06/23/2022
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Rodrigo Pacheco — Foto: Roque de Sá/Agência Senado
Pressured by the crisis of high fuel prices and the preventive detention, on Wednesday, of former Education Minister Milton Ribeiro on suspicion of corruption, the federal government and the governing coalition in Congress have accelerated the formulation of vote-getting measures. Behind the scenes, the trucker voucher had its value raised to R$600 from R$400. Furthermore, talks have begun to increase the emergency aid and plans are also underway to increase the gas voucher.
The plan is to include all these measures in the constitutional amendment proposal (PEC) 16, which is being analyzed by the Senate. In its current version, the PEC authorizes the federal government to pay up to R$29.6 billion to states that reduce to zero the sales tax ICMS rate on diesel and cooking gas and sets a 12% rate for ethanol.
These negotiations are seen with concern by the economic team, given their impact on public accounts. The R$600 trucker voucher will cost R$3 billion; doubling the value or range of the gas voucher would cost nearly R$2 billion. The idea of raising the emergency aid surprise the government’s technical staff, although the political team never gave up the plan of raising the value to R$600.
All these additional expenses go in the opposite direction of the goal of closing the public sector accounts in the black and setting a downward trajectory for the public debt.
In relief to the economic team, Senate President Rodrigo Pacheco (Social Democratic Party, PSD, of Minas Gerais) said Wednesday that it is necessary to have responsibility with the spending cap. “Issues related to the fuel PEC must be preceded by impact studies and election-related barriers,” he added.
Behind the scenes there is a discussion about the feasibility of launching these aid measures, because of the electoral legislation. One hypothesis raised would be the decree of a new state of calamity. There is, however, no consensus on this. Economy Minister Paulo Guedes has been fighting this idea in recent months.
Ítalo Franca, with Santander’s team of economists, pointed out that “there is some doubt about the legal possibility” of implementing aid to truck drivers this year “even through a PEC, because electoral legislation restricts the creation of new benefits,” he said.
Gabriel Leal de Barros, a partner and chief economist at Ryo Asset, has a similar view. The trucker voucher would cost R$1.8 billion from July to December of this year if it were fixed at R$400 and R$2.7 billion if it were R$600, according to his calculations.
Mr. Barros says he has “reservations” about the proposal. “It doesn’t make economic sense to subsidize fossil fuel and still allocate taxpayer money that don’t benefit the poorest,” he said, also citing “the risk of loss of control” over spending during the analysis of the proposal, especially in an election year.
He also says that it is “very negative” the fact that “we are amending the Constitution every six months,” since the aid would be implemented by means of a PEC. “This is not good for the fiscal framework and for the predictability needed by economic agents,” he said.
The R$400 voucher was called “alms” and a “joke” by truck drivers’ leader Wallace “Chorão” Landim. The same comment had been made by him and other unionists last October, when the idea was unveiled by President Jair Bolsonaro.
By Renan Truffi, Lu Aiko Otta, Estevão Taiar, Raphael Di Cunto — Brasília
Source: Valor International