The idea of creating a “tax cushion” to soften the blow caused by fluctuations in fuel prices has come up cyclically when oil prices rise in the international market.

That’s how the government responds to pressures to “do something” to tackle the rise in fuel prices in the domestic market. The debate is dropped as soon as the price declines. This was the case in the 2018 truckers’ strike.

This once, the “tax cushion” resurfaced in an interview with the Minister of Mines and Energy, Bento Albuquerque, published on Wednesday’s edition of the newspaper O Globo.

When asked if the federal tax Cide no longer fulfilled this function, the minister said that this tax has lost this role.

Cide was created in one of these moments of high oil prices precisely to be the so-called “tax cushion.” The law that created it in 2001 says that its collection is intended to the “payment of price subsidies or transportation of fuel alcohol, natural gas and its products and oil products,” before mentioning other purposes.

But, as time went by, Cide lost this regulatory function and became a tax to raise collection. Currently, its revenues are shared with states and municipalities and linked to the financing of transportation infrastructure, for example.

The creation of a new tax to resume the original idea of Cide, however, is not the object of in-depth studies at the Ministry of Economy at the moment, the source says.

The strategy outlined by the economic team goes another way: the Supplementary Law 192, which made its way in Congress as Supplementary Law Project 11/2020, which changes the taxation on fuels. This law exempts diesel, cooking gas and aviation kerosene from federal taxes and changes the way sales tax ICMS is levied.

The economic team is now waiting for the effects of this bill, signed into law last week, before deciding on further steps.

The decline in the price of a barrel of oil to levels below $100 strengthens this line. The expectation behind the scenes now is that Petrobras can reduce its prices, as President Jair Bolsonaro demanded on Wednesday.