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After Federal Government Announcement That Ethanol Import Tax Would Be Eliminated, Gasoline Prices Expected to Decrease

Written by Roberta Souza

Published on 22/03/2022 at 21:43

Economy, Oil and Gas

Foto: Reprodução Google Imagens

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The Decline In The Price Of The Two Fuels With The Removal Of The Tax Occurs Because Ethanol Is Added To Gasoline, As Well As The Two Fuels Being Competitors

After the announcement by the Federal Government on Monday (21) that the import tax on ethanol would be zeroed, the Secretary of Foreign Trade of the Ministry of Economy, Lucas Ferraz, informed that the price of a liter of gasoline should be reduced by R$ 0.20. In addition to ethanol, the Ministry of Economy also eliminated taxes on foods that make up the basic basket.

According to the Diário do Nordeste, the reduction in gasoline prices will occur by the end of 2022. The decline in gasoline price occurs because, in addition to the two fuels being competitors, ethanol – a fuel that had an import tax of 18% – is added to gasoline. Furthermore, Lucas Ferraz also reported that there was a 37% increase in the price of ethanol over the past year, following the increase in the price of gasoline.

Lucas Ferraz states that with the reduction of the import tax on ethanol, the intention is to create a supply shock.

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Reduction Of Import Taxes

The Ministry of Economy confirmed the reduction of import taxes on ethanol, some food products, and IT and capital goods. According to Lucas Ferraz, with the Government’s measures, the total fiscal waiver will be R$ 1 billion.

There was also a 10% reduction in the import tax on IT and capital goods (BIT/BK) that will take effect from April this year. In 2021, the government had already reduced 10% of the taxes on these products.

Increase In Fuel Prices

The spike in oil prices is reflected in the pockets of Brazilians. The Petrobras announced on March 10 new price increases for gasoline, diesel, and cooking gas throughout Brazil. The new increase comes after nearly 2 months of frozen prices at the state-owned refineries. According to Abicon, even with the new adjustment, gasoline and diesel remain undervalued compared to the prices practiced in the international market.

The average price of gasoline for distributors will rise from R$ 3.25 to R$ 3.86 per liter, which means an adjustment of 18.8%. In the case of diesel, the average price per liter will be adjusted from R$ 3.61 to R$ 4.51, which means a high of up to 24.9%.

In the case of LPG (Liquefied Petroleum Gas), better known as cooking gas, there will be an adjustment of 16.1%, where the price charged per kg will rise from R$ 3.86 to R$ 4.48, equivalent to R$ 58.21 for 13 kg.

After Federal Government Announcement That Ethanol Import Tax Would Be Eliminated, Gasoline Prices Expected to Decrease

The Decline In The Price Of The Two Fuels With The Removal Of The Tax Occurs Because Ethanol Is Added To Gasoline, As Well As The Two Fuels Being Competitors

Reduction Of Import Taxes

Increase In Fuel Prices

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After Federal Government Announcement That Ethanol Import Tax Would Be Eliminated, Gasoline Prices Expected to Decrease

The Decline In The Price Of The Two Fuels With The Removal Of The Tax Occurs Because Ethanol Is Added To Gasoline, As Well As The Two Fuels Being Competitors

Reduction Of Import Taxes

Increase In Fuel Prices

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With more than 635,000 doctors, Brazil sees competition increasing in large cities, and recent graduates are competing for shifts at an accelerated pace while the countryside still faces shortages.

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