Cheaper gasoline: what other countries are doing to try to keep prices down

Cheaper gasoline: what other countries are doing to try to keep prices down

With the rise in the international price of a barrel of oil – due to the war in Ukraine, the sanctions against Russia and the high demand for energy after the most critical phase of the pandemic – consumers not only in Brazil, but also in several countries, have paid more for fuel.

Last Friday (17), Petrobras announced a new increase in the price of gasoline and diesel, which triggered a political crisis within the public company and led to the resignation of José Mauro Coelho, until then president of the company.

In an attempt to circumvent the successive rise in the price of petroleum products, many countries have adopted similar strategies: creation of funds, tax cuts, subsidies and income transfers. But there are even those who have created additional fees to collect more.

O UOL spoke with experts in this field to understand how each nation is handling the fuel crisis and what alternatives would be viable for Brazil. See below:

stabilization fund

Thinking in the long term, many countries have created funds to stabilize the prices of petroleum products. This is the case of Peru and Chile.

“In Peru, they set a minimum level for fuel prices. If the price falls below that level, they raise taxes and collect that difference. When the price goes up, they use the amount collected to try to curb the increase,” he explains. Mario Rubens, economist and professor at the Faculdade Getúlio Vargas (FGV).

“In Chile it’s a bit different. They have an applied investment portfolio, and with the profitability of this fund, they’re trying to control fuel prices there more,” he adds.

Grants and income transfer

Other countries have taken up the challenge of subsidizing the cost of petroleum derivatives so that the population does not feel the impact of high prices so much. This is the case of Portugal, the United Kingdom, Japan, Estonia and Greece.

“Portugal gives a discount of 10 euro cents, per liter, on the price of fuel. Limited to 50 liters per month. England subsidizes the electricity bill of 200 pounds, which will have to be paid by the consumer at the future up to five years,” says Mario Rubens.

It should be remembered that in Europe, a large part of the electrical energy is produced by gas or coal-fired thermoelectric power stations. Therefore, the increase in petroleum derivatives has an impact not only on fuels, but also on the final price of the electricity bill.

Consumption tax cuts

Reducing fuel taxes is one of the main strategies adopted by governments around the world. The most recent example is that of the United States, where President Joe Biden on Wednesday asked Congress for a three-month suspension of a federal tax on the price of gasoline.

India, Germany, Italy, Spain and Belgium also followed this line. “Tax cuts are one of the most common alternatives. In India, for example, taxes have been reduced on plastic, iron, steel and petroleum,” says economist Angela Póvoa, professor at the Business School of the Pontifical Catholic University of Paraná (PUC-PR).

Business tax increase

Unlike other countries, Mexico has created an additional tax for companies that profit more from the international increase in energy prices. Through this collection, the country is able to subsidize the value of gasoline for the domestic consumer.

According to the chief economist of the Ministry of Finance of Mexico, this measure makes it possible to subsidize gasoline up to 35% of its value. A similar measure was taken in Finland to contain rising fuel prices.

Is it in Brazil?

Brazil has also chosen to limit the maximum collection of the ICMS (Tax on the circulation of goods and services) to 17%. The proposal has been approved in Congress and is awaiting presidential assent. However, for experts, this measure may become ineffective over time due to the nature of the fee.

“Missing the ICMS is a big mistake, because it is a tax that is levied as a percentage. If it was a fixed tax per liter, it would be better. another problem. [que perderam]? Health, education? You have a social side effect that is not evaluated”, explains Angela Póvoa.

Mario Rubens regrets that the government is not able to mitigate the rise in fuel prices and that there is a lot of political conflict. “They accuse each other, but there is no government action to solve this problem,” he says.

According to Professor FGV, the best would have been to create a price stabilization fund. “But it should have been done a long time ago. Now the only option is to cut taxes, which won’t work for a long time. The price here is international, that is, it will fluctuate with the market. If it continues to increase, it cancels out this tax cut,” he explains.

Angela says the government can still work on creating social benefits for those most affected. “They can create a subsidy for truckers who depend on diesel and help people buy gasoline. However, because it’s an election year, you can’t create income transfer mechanisms. C is an additional difficulty.”

#Cheaper #gasoline #countries #prices