Brazil Expands Fuel Tax Cuts, Subsidies as Iran War Carries On

Luiz Inacio Lula da Silva Photo by David Dee Delgado /Photographer: David Dee Delgado/Article content(Bloomberg) — Brazil’s government will expand federal tax cuts and subsidies on fuels as it attempts to shield consumers from rising prices due to the war in Iran, broadening measures it had previously unveiled amid the conflict.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentPresident Luiz Inacio Lula da Silva’s administration will temporarily eliminate so-called PIS/Cofins taxes on biodiesel and aviation fuel, while also subsidizing local diesel production and the import of cooking gas, Finance Minister Dario Durigan told reporters Monday. Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentThe measures are part of a broader package Lula’s economic team unveiled as it tries to blunt the effects of a war that is now in its sixth week. The measures, which will also allow airlines to access credit lines from a national aviation fund, will take effect immediately and initially last two months, according to Planning Minister Bruno Moretti. Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentThe plan includes a subsidy of 1.20 reais per liter for diesel imports, the cost of which will be shared by the federal government and states. It also creates a subsidy of 0.8 reais per liter for diesel produced domestically. Article contentCombined with measures announced last month, the package will increase total subsidies to 1.52 reais per liter for diesel imports and 1.12 reais per liter for domestic production.Article contentThe cost will be largely offset by taxes on oil exports and other related revenues, Durigan said. The additional subsidies will have a fiscal impact of 10 billion reais ($1.9 billion), but offsets will allow the government to comply with its 2026 budget goal, Durigan said. Lula’s administration is targeting a modest primary surplus, excluding interest payments, this year.Article contentArticle contentThe extended conflict has caused a sharp rise in global oil prices since it began in late February, forcing governments around the world to respond. Lula has acted with particular urgency in the face of renewed inflationary concerns ahead of Brazil’s October presidential vote, in which the veteran leftist leader is planning to seek reelection.Article content“Lula gave us guidance that a war that has nothing to do with Brazil cannot harm our population,” Durigan said at a press conference.Article contentThe package builds on initial steps his government took in mid-March, when it temporarily eliminated the PIS/Cofins tax on diesel imports and sales while offering subsidies to producers and importers of the product. Article contentMoretti said the government could raise as much as 40 billion reais in revenue linked to oil.Article contentThe government plans to review the measures every 60 days, Moretti said. He added that it will take additional steps to combat high fuel prices if necessary, and that companies that receive subsides will be required to pass those cost benefits on to consumers.Article contentMines and Energy Minister Alexandre Silveira said the government will also impose higher fines for price gouging, and grant a federal agency powers to close gas stations if it determines they are engaged in the practice.Article content—With assistance from Daniela Milanese and Daniel Carvalho.Article contentTrending CRA denied taxpayer with multiple health issues the disability tax credit Personal Finance Posthaste: Why Canadians will feel the squeeze of soaring gas prices more than Americans News Opinion: The world has an energy problem and Canada is the solution Energy Subscriber only. 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