Brazil extended its fuel price support measures for one month and announced new tax incentives aimed at gasoline, ethanol, and diesel imports as part of efforts to mitigate the impact of rising global oil prices on consumers.
Government extends and adds tax measures
The government said gasoline federal taxes would be effectively zero under the new gasoline decision, which includes a reduction of 0.89 BRL per litre from PIS/COFINS and CIDE. This reduction equals approximately 0.18 US dollars per litre. For ethanol, the tax reduction on PIS/PASEP and Cofins of 0.19 BRL per litre was extended.
The existing support for diesel importers remains at 2.12 BRL per litre, or about 0.43 US dollars, with an additional subsidy of 1.40 BRL per litre (roughly 0.28 US dollars) set for a 30-day period.
Costs and government statements
The estimated cost to the 2026 budget for gasoline and ethanol tax arrangements is 3.6 billion BRL, or 730 million US dollars. The additional subsidy for imported diesel over the 30-day period is expected to cost 1.6 billion BRL, equivalent to 324 million US dollars.
Minister of Finance Dario Durigan rejected claims that the measures were related to the election campaign. He said fuel price support had been announced regularly following the war launched by the United States and Israel against Iran. The government expects the support to be reflected in consumer prices and to lead to a de facto fall in fuel prices.
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Policy aims and timing
The government described the decision, announced on Friday, as part of steps by President Luiz Inacio Lula da Silva to reduce cost-of-living pressures ahead of the second round of presidential elections to be held this month. The current support was set to end on the same day and the new package took effect immediately.
Source: the government
