1. Home
  2. / Economy
  3. / Lower taxes in Brazil! Minister says Lula government will reduce taxes to curb rising food prices
reading time 4 min read Comments 0 comments

Lower taxes in Brazil! Minister says Lula government will reduce taxes to curb rising food prices

Written by Alisson Ficher
Published 25/01/2025 às 19:40
Lula government announces measures to contain high food prices, including tax reductions and support for family farming.
Lula government announces measures to contain high food prices, including tax reductions and support for family farming.

Food inflation is the focus of the Lula government! With expectations of a bumper harvest in 2025 and tax cuts, Brazil may see relief in prices. Measures such as regulating meal vouchers and encouraging family farming promise to change the scenario. But will they be enough to ease the burden on Brazilians' pockets?

As the price of food increasingly weighs on Brazilians' pockets, the federal government seems determined to change this scenario.

In a move that mixes optimistic expectations and practical decisions, the administration of President Luiz Inácio Lula da Silva announced measures to curb inflation and bring relief to consumers.

But, after all, what are these initiatives and how do they directly impact the population's daily lives?

Tax cuts to contain prices

In a meeting held last Friday (24), the Minister of the Civil House, Rui Costa, declared that the government is willing to reduce import tariffs for products that have domestic prices above those practiced on the international market.

The measure aims to increase competitiveness and force a drop in the prices charged in Brazil.

— If the prices of these products on the international market are lower than on the domestic market, this will be quickly analyzed and the import tax will be reduced — said the minister.

The government makes it clear, however, that it does not intend to adopt practices such as subsidies or artificial price controls.

Rui Costa reinforced that price formation will continue to be governed by market dynamics, without interventions that could generate economic distortions.

Expectation of a bumper harvest in 2025

Another point highlighted by Rui Costa was the optimism regarding the agricultural production for 2025, which should boost supply and help reduce prices.

According to the National Supply Company (Conab), this year's harvest should see significant increases in several products: rice should grow by 13%, beans by 5%, and overall production by 8,2%.

— The Brazilian government is convinced that prices are set in the market and not artificially. For 2025, we have extremely positive expectations of a bumper harvest — the minister highlighted.

Furthermore, the government intends to engage in dialogue with producers, supermarket chains and meatpacking plants to outline strategies that increase the supply of essential foods and reduce costs.

Impact of the international scenario

According to Rui Costa, food inflation in Brazil in 2024 was strongly influenced by external factors, such as the rise in commodity prices on the international market.

Products such as coffee, soybeans, corn and oranges, which have their prices defined globally, directly impacted the final cost for the Brazilian consumer.

— It is a scenario that has no direct relation to the Brazilian economy, but with the international prices of these commodities — explained the minister.

Furthermore, adverse weather events and increased demand for Brazilian products in other countries contributed to the imbalance in domestic supply.

Focus on the basic food basket and family farming

The Lula administration also wants to intensify support for family farming, which plays a crucial role in the production of basic food items.

Programs such as the Safra Plan saw a 43% increase in available resources, which resulted in greater production of items such as beans, potatoes, carrots and pumpkins.

The Minister of Agrarian Development, Paulo Teixeira, stated that the focus is on increase the productivity of small farmers and ensure that basic products reach Brazilians’ tables at more affordable prices.

— The second effort is to focus measures on foods that make up the Brazilian basic food basket and increase the productivity of small producers — Teixeira highlighted.

Regulation of meal and food vouchers

Another area of ​​government action is the regulation of the meal and food voucher market, mentioned by the Minister of Finance, Fernando Haddad.

According to Rui Costa, the intermediation cost of operators reaches 15% of the benefits, a value that the government intends to reduce so that more resources are directed to the worker.

— When an intermediary appropriates part of the worker's benefit, measures must be taken so that the amount reaches those who need it directly — stated Costa.

Internal disagreements and next steps

Despite the joint effort, some disagreements still exist between the ministries involved.

While the economic area points out the impact of exchange rate devaluation on the cost of agricultural inputs, sectors linked to agriculture highlight the effects of the dollar and the influence of climatic factors.

The government is also analyzing policies already implemented, such as option contracts to stimulate rice production, considered a success after the cancellation of the controversial cereal auction.

These initiatives helped to increase production and should help to stabilize prices.

What to expect from now on?

There is still no final definition on all the measures that will be adopted, but the government promises to advance discussions with the private sector and the implementation of policies that benefit the population.

The challenge lies in reconciling the interests of different sectors and ensuring that actions have an effect without generating economic imbalances.

Do you believe these measures will be enough to contain the rise in food prices and ease consumer spending? Leave your opinion in the comments!

Be the first to react!
React to article
Registration
Notify
guest
0 Comments
Older
Last Most voted
Feedbacks
View all comments
Alisson Ficher

Journalist graduated in 2017 and working in the field since 2015, with six years of experience in print magazines, stints on broadcast TV channels and over 12 online publications. Specialist in politics, jobs, economics, courses, among other topics. Professional registration: 0087134/SP. If you have any questions, want to report an error or suggest a topic on the topics covered on the site, please contact us by email: alisson.hficher@outlook.com. We do not accept resumes!

Share across apps
0
We would love your opinion on this subject, comment!x