The government expanded, this Wednesday (11), the list of products that will have cuts or zero rates in II (Import Tax). The purpose of the measure is to encourage imports and increase competition in the domestic market, contributing to lower prices and inflation.
Specialists estimate that, just as it did not work with the products benefited by cuts from the II in March, the new measure, with the inclusion of more benefited products, will also have no practical effect. The conclusion is that, with the expansion of the exemption, the government intends to demonstrate that it is not standing still in the face of the problem and that it is concerned with finding solutions to contain inflation — although, as seems to be the case, cutting II is not, at least for the moment, effective providence.
After cutting, in March, the II of coffee, margarine, soy oil, macaroni, cheese (which is now taxed again) and sugar, will now have reduced or zero tax, until the end of this year, wheat flour, corn , frozen beef and poultry, steel bars, fertilizers and fungicides. According to the executive director of Camex (Chamber of Foreign Trade), an agency of the Ministry of Economy, Ana Paula Repeza, the products chosen had “a great rise in price, and the reduction in tariffs aims to contain inflation.
The very size of the exemption estimated by the government, of only R$ 700 million until the end of the year, is an indicator of the low amplitude of the measure. More than that, market conditions tend to cancel out even this small positive effect on prices and inflation.
“External prices of most of these products are also rising, as well as the exchange rate is more devalued”, recalls economist André Braz, coordinator of the Consumer Price Index at FGV (Fundação Getúlio Vargas), exemplifying with the quotations of the wheat, which rose sharply after the war in Ukraine. In these circumstances, it is difficult, according to the economist, to imagine that the volume imported and the possible difference in prices could intensify competition in the market and promote a decline in prices.
Braz maintains that the measure will be ineffective based on what happened with the prices of products on the March list. “Coffee, margarine and soybean oil prices continued to rise”, recalls the economist.
In addition to prices, internal and external, market factors influence the values that end up being practiced. Again, at least at the moment, the isolated cut of the II tends to have little effectiveness in bringing prices down. In the case of meats, for example, the market power of large Brazilian meatpackers is great to impose difficulties on importers, especially those of cheaper products.
A little different is the situation of steel — rebar for civil construction, for example —, which is included in the measure. With the Chinese economy going through a cooling off phase, there has been a drop in iron ore prices. But the product does not enter the basket of goods and services of the IPCA (Broad Consumer Price Index), or other consumer price indices. It has no direct influence on the household budget and does not impact the price indices that count for the population.
