RIO DE JANEIRO, BRAZIL – In a memo, the Economy Ministry accused the state governors of not adopting the new fuel tax rules approved by Congress to reduce the price of gasoline, ethanol, and diesel in the country.
The document was released to the press Thursday afternoon (5).
The bill passed by Congress eliminated PIS/Cofins taxes on diesel and gas by the end of 2022.
The Department believes that state governments have managed to take full advantage of the reduction in fuel taxes but have not passed this on to motorists in the form of price reductions.
State revenues have reached their highest level in 23 years due to the ICMS; a tax levied on fuel.
“In other words, the state and federal district advisors’ decision has neutralized the law’s objectives and made it go nowhere,” said the ministry, led by Paulo Guedes.
BRAZILIAN FUEL PRICES ARE BEYOND REASONABLE
Gasoline price reached a record high in the country at R$7.27 (US$1.45) per liter, or US$5.50 per gallon. GDP per capita in Brazil is about nine times lower than in the U.S., and the Purchasing Power Index is about one-third that of the U.S. Simply put, the cost of fuel is hurting Brazilians as much as if Americans had to pay a price of least US$16.50 per gallon.
Add to this the massive price increases in essential goods, and it is no wonder that over 50% of households are now considered poor. Often they are working poor. They maybe have a house, a car, furniture – all on credit – but they can no longer drive around and eat only the cheapest food, if at all regularly.
Uber, food delivery, and the like are also outside the budget of many Brazilians because gasoline prices have made trips massively more expensive.