Brazilian Government Doubles Gasoline Taxes and Freezes R$ 5.9 Billion in Expenses

07/21/2017 - 10h24

Government has increased fuel prices and froze R$ 5.9 billion (US$ 1.89 billion) in expenses, resulting in sharper cutbacks in public resources. The measure might affect services next month. PIS/Cofins tax rates on gasoline will double.

As of today, pump prices for gasoline may have adjustments of up to R$ 0.41 (US$ 0.13) and for diesel fuel, whose taxes have increased by 86%, of R$ 0.21 (US$ 0.07). The increase may reach R$ 0.20 (US$ 0.06) for ethanol. Gas stations may bear part of the adjustment to attract customers.

The government expects to collect R$ 10.4 billion (US$ 3.33 billion) this year due to the increase. By March, the economic team had already blocked R$ 42.1 billion (US$ 13.4 billion) from the Budget, but was required to release R$ 3 billion (US$ 962 million) for mandatory health expenses.

In exchange for support in Congress to block the corruption charges he faces, president Michel Temer has also released R$ 1 billion (US$ 320 million) for lawmaker projects.

The measures announced on Thursday (20th) coincide with the government's difficulty in obtaining revenue. Economic recovery is slow, which affects the collection of taxes. Projects likely to improve the outlook, such as Refis and the elimination of tax relief on payrolls are currently at a stalemate in Congress.

Industry associations, such as CNI and Fiesp, criticized the government's decision to increase fuel taxes. President's advisors state the new restrictions on expenses, however, will be reviewed as soon as "short-term" measures are taken.

Translated by ANA BEATRIZ DEMARIA

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	Zanone Fraissat - 2.fev.2015/Folhapress
	Brazil's government said on Thursday (20th) it would raise the price of gasoline