Fixed ICMS avoids price worsening, but does not generate “much refreshment”, says economist

The decision of the governors to fix the value of the ICMS for the diesel around R$ 1 a liter is a measure that prevents prices from worsening, but “there will not be much refreshment” for consumers, according to Virginia Parente, economist and professor at the Institute of Energy and Environment at the University of São Paulo (IEE -USP).

In an interview with CNN This Friday (25), she said that the decision “will not only make things worse”, and that it was a “good solution” for the current scenario, of skyrocketing prices of fuels.

“As it was, the tax rate varied by base. If the price of oil went up in the international market or had currency devaluation, taxation was accompanying, exponentiating, worsening the increase,” he says.

She assesses that fuel prices are already very high in Brazil, and that the fixed tax removes the possibility of each increase being made worse.

“Gasoline and diesel prices are very important in Brazil, especially diesel because our goods are transported on wheels. This ends up making it more expensive and having a very strong impact on the inflationand affects the pockets of the poorest, it is a delicate situation, and this measure alleviates it, but to a small extent”, he evaluates.

“It has a fixed value for a fixed period, which helps not to exacerbate the worsening of fuel prices felt here by variations in the international market and our exchange rate”. However, Parente considers that Brazil could still try to carry out other measures to alleviate the price of fuel.

“We should have already created a mattress to cushion this volatility, the very constant variation, because this affects the planning of freight prices, truck drivers, the logistics of people in cities. Having less variation would be very useful, but for that you have to form a mattress.”