By Roberto Samora
SÃO PAULO (Reuters) – If the Brazilian government decides to maintain the PIS/Cofins exemption for gasoline and ethanol, the biofuel industry could lose at least 200,000 direct and indirect jobs, since it will be without a tax differential that previously favored renewable fuel, said this Friday the president of the Sugarcane Industry Union (Unica).
Evandro Gussi stated that maintaining the exemption –or “fossil fuel subsidy” to the detriment of renewable fuel– would thus cost around 8% of the direct and indirect jobs generated by the ethanol segment in the country, which today add up to around 2.5 million jobs in an industry spread across 1,200 Brazilian cities.
The executive at Unica, an entity that represents sugar, ethanol and bioenergy producers in the center-south of Brazil, also said that many investments forwarded have been suspended since the PT government renewed for two months the exemption for fuels implemented in the Jair Bolsonaro administration, generating doubts about policies for the sector.
“In the current condition, there are plants that are not worth grinding cane to produce ethanol,” said Gussi, pointing out that 30% of the sugarcane industry only makes ethanol, with no sugar factory.
Although the government has indicated a reinstatement as of March, there are opposing currents linked to President Luiz Inácio Lula da Silva. The president of the PT, federal deputy Gleisi Hoffmann (PR), defended this Friday the postponement of the return of the tax until Petrobras changes its price policy. The Minister of the Civil House, Rui Costa, would also be in favor of maintaining the exemption.
“It’s scandalous, a position like that from a government that defends action against climate change,” Gussi told Reuters, while Unica claims that ethanol reduces emissions by up to 90% compared to gasoline.
The so-called political wing of the government argues that the reenactment could generate inflation and be unpopular, since the full return of taxation would mean an increase in the price of gasoline of 79 cents per liter in PIS/Cofins and another 10 cents per liter in Cide. For ethanol, it would rise 24 cents.
The Ministry of Finance, on the other hand, is counting on the return of taxation scheduled for next Wednesday, two sources who follow the issue told Reuters, although they still fear that President Luiz Inácio Lula da Silva will take a decision in the opposite direction in the coming days.
In addition to the environmental issue, Gussi commented that there are social and fiscal issues that go beyond the risk of high prices. And he quoted Lula’s recent phrase, that the “common good of the people” should be greater than political differences, when the president was talking about actions to minimize the tragedy on the north coast alongside governor Tarcísio de Freitas. The executive said that the petista should think about it when deciding for the reinstatement.
For the president of Unica, exempting gasoline is taking away resources that could be available to the poorest, including those who do not have cars. If it manages to guarantee the reencumbrance, the economic team will have an increase of approximately 29 billion reais in the federal coffers in 2023.
Gussi also recalled that the provisional measure that deals with the exemption of PIS/Cofins taxes on fuel, published at the beginning of the year, is unconstitutional.
Unlike what happened in the law approved in the Bolsonaro government, when there was a compensation of 3.8 billion reais in credits, in the PT MP the sector was not contemplated in order to comply with the legal obligation of there being a tax differential between gasoline and ethanol, guaranteeing competitiveness to the renewable fuel, said the president of Unica.
“It’s been worse than Bolsonaro’s change,” he said, comparing the positions of some PT members with those of the previous government.
He also recalled that in previous PT administrations around one hundred plants were closed, when the economic team used Petrobras’ policies to control prices, which impacted ethanol production.