Government Targets Exporters in order to Lower Cost of Diesel

06/01/2018 - 11h27

In order to lower the cost of diesel - an initiative that will cost the federal government R$ 9.6 billion (US$ 2.6 billion) - the Michel Temer administration has announced that it will raise taxes on exporters and certain sectors of the industry: namely the soft drinks and chemical industries.

Funds connected to transportation, healthcare and education were also cut. The combination of tax raises - which were approved by Brazil's lower chamber - and budget cuts will allow the government to collect R$ 4 billion (US$ 1.1 billion).

Exporters will end up losing money due to changes concerning Reintegra, which used to lead to a 2% rebate on the value of exported manufactured products through PIS/Cofins credits. However, the refund rate will now drop to 0.1%.

According to the administration, the budget cuts, which add up to R$ 3.4 billion (US$ 914 million) were pulverized.

Among the federal programs that were affected are land transportation programs, anti-drug initiatives, higher education scholarships, highway patrol and public healthcare funds.

Institutional Security Minister Sergio Etchegoyen said that those who supported the truckers' strike will be responsible for financing the measures designed to address the financial crisis.

"90% of the population supported the demonstration," said Mr. Etchegoyen, referring to a Datafolha poll indicating that 87% of the country supported the truckers' strike. "The government does not produce money: it raises funds".

Translated by THOMAS MATHEWSON

Read the article in the original language