Court suspends fuel price increase again.
The Federal Court suspended again this Thursday (24) the increase in PIS/Cofins rates on fuels; this time, the suspension occurred by an injunction granted by Judge Ricardo Nüske, of the 13th Federal Court of Porto Alegre; it is the fifth decision against the measure proposed by the Ministry of Planning; the Attorney General's Office promises to appeal the injunction.
Brazil Agency - Judge Ricardo Nüske, of the 13th Federal Court of Porto Alegre, today (24) ordered the suspension, on a preliminary basis, of the increase in the rates of the Social Integration Program (PIS) and the Contribution for the Financing of Social Security (Cofins) on fuels throughout the state of Rio Grande do Sul.
This is at least the fifth decision in the country suspending the increase in fuel prices. The four previous court rulings – three national in scope, issued in Brasília and Rio de Janeiro, and one state-level in Paraíba – were overturned on appeal by the Attorney General's Office (AGU).
Like the previous ones, the decision in Rio Grande do Sul was made after a class-action lawsuit was filed by lawyer Ricardo Breier, president of the Rio Grande do Sul chapter of the Brazilian Bar Association (OAB).
In all the lawsuits, the arguments were always the same: the tax increase should not have been done by decree, but only by a bill voted on in the National Congress, as determined by the Constitution.
Another argument is that, even if approved by Parliament, the increase could only take effect 90 days after presidential approval, in accordance with another constitutional rule called the ninety-day prior notice period.
The Attorney General's Office (AGU) has stated that it will appeal again as soon as it receives notification of the decision. According to the AGU, the tax increase is justified by the exceptional situation of a severe deficit in public accounts. The government expects to collect an additional R$ 10,4 billion this year with the increase in PIS/Cofins taxes on fuels.
The decree of July 20th increased the PIS/Cofins tax rate from R$ 0,3816 to R$ 0,7925 per liter of gasoline and from R$ 0,2480 to R$ 0,4615 per liter of diesel at refineries. For ethanol, the rate increased from R$ 0,12 to R$ 0,1309 per liter for producers. For distributors, the rate, previously zero, became R$ 0,1964.