Brazil’s Lula government fails to control spending and starts to tax fuel again

Brazil’s Lula government admits it cannot give up almost R$29 billion in PIS/Cofins (Brazilian VAT) that will be charged to those who fuel their vehicles.

The collection will be slightly lower than expected, with more on gasoline and less on ethanol, announced yesterday, Monday, by the Ministry of Finance.

The Bolsonaro administration suspended the VAT, providing relief to overindebted Brazilian households.

The Minister of Finance, Fernando Haddad, has yet to report the tax collection percentages.

Before the tax exemption, tax collection on gasoline was 79 cents per liter ($0.15).

On the other hand, ethanol had a tax differential that gave it an advantage over the petroleum derivative, for a collection of 24 cents per liter (0.045 dollars).

With the return of taxes for ethanol and gasoline, the economic team counts on a reinforcement of about US$29 billion (about US$5.575 billion) in the public coffers this year.

Federal taxes on diesel and cooking gas will remain zero until December 31.

LARGEST NUMBER OF MINISTRIES IN LATIN AMERICA

One of the main reasons why Lula’s government could not get by with less money, as Bolsonaro has done, is that the leftist ruler had to create 37 ministries to accommodate his allies who brought him to power.

The folders created (or recreated) include the ministries of Ports, Native Peoples, and Racial Equality.

Brazil is above the global average in this regard.

The country has more ministries than countries with a similar level of development, such as Argentina (18), Colombia (18), Mexico (20), South Africa (27), and even Venezuela (33), presided over by the eccentric dictator Nicolás Maduro.

The current administration promotes a spending spree, even supporting ministries to accommodate Landless Workers’ Movement (MST) members and trade.