Brazilian Taxpayers Will Suffer the Consequences of Cheaper Diesel for Truckers

05/25/2018 - 11h29

The Brazilian government announced yesterday an agreement with truckers' representatives to suspend their strike for 15 days. Since Monday (21), the strike has caused road blockades in 25 states, affecting goods distribution in the country.

In addition to promising to reduce the CIDE fuel tax on diesel - a measure already announced on Tuesday (22) - the government said it will reimburse Petrobras in case of losses so that the company may extend the 10% discount of on the price of diesel in the refinery for a month.

After the first month, the government stated it will maintain the subsidy so that diesel prices in the refinery may be adjusted every 30 days.

	Jorge Araujo / Folhapress
	Truck drivers protesting against the price hike of diesel fuel have blocked some of Brazil's main highways

This mechanism will be implemented until the end of the year and, according to the government's estimate, Petrobras will receive about R$ 5 billion (US$ 1.37 billion) - Petrobras has suffered a 14% drop in the stock market after the government's intervention in its policy, despite efforts of the company's president, Pedro Parente, to soothe investors.

The fast pace at which the strike has spread raised suspicions that transportation companies were participating in the strike, which is prohibited by law. This would be the so-called lockout, a work stoppage organized by the business sector.

Such suspicions were mentioned to Folha by minister of security, Raul Jungmann. Concerned about the shortage of products, people waited in long lines at gas stations. The shortage also affected supermarkets, which rationed sales.

Services have also been affected. Hospitals had to cancel elective surgeries in Santa Catarina and, in Rio, utility companies asked residents to save water because of a possible reduction.

Waste collection and bus services announced their services would be fully or partially suspended in São Paulo, as well as the rodízio (vehicle restriction). Military police reduced the number of officers on patrol.

Translated by ANA BEATRIZ DEMARIA

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