Lula scraps tax, subsidizes diesel to curb oil hike
Brazilian President Luiz Inácio Lula da Silva signed a presidential decree on Thursday (Mar. 12) bringing tax rates on diesel oil imports and sales to zero. He also signed a provisional measure subsidizing diesel for producers and importers.
“[The measures aim] to ensure that this war does not reach the pockets of drivers, especially truckers so it won’t reach the plate with beans, lettuce, onions, and the food that [Brazilian] people eat the most,” Lula told journalists in Brasília.
The measures were announced as temporary and justified due to the rise in oil prices caused by the war in Iran, which has forced countries to resort to emergency reserves.
Prices
The tax cut should reduce the price of diesel by BRL 0.32 per liter at the refinery. The subsidy to producers and importers should reach BRL 0.64 per liter of diesel, as per calculations by the Ministry of Finance.
The subsidy to producers and importers will be conditional on proof that the amount has been transferred to end consumers.
President Lula added that the oil export tax will have a high rate to offset the diesel subsidy.
The government has also designed oversight and transparency measures to combat abusive fuel price increases caused by speculative activities. Present at the presser, Finance Minister Fernando Haddad explained that abusive practices should be defined by objective criteria established by Brazil’s oil authority ANP.
