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Brazil’s Senate approves bills to curb fuel prices -Breaking


© Reuters. A fuel pump in a Petrobras station, Brasilia (Brazil) March 7, 2022 lets out gasoline. REUTERS/Adriano Machado

BRASILIA (Reuters – Brazil’s Senate approved Thursday two bills aimed to reduce fuel price increases with subsidies and tax exemptions. While this is a good step for Petrobras state-owned oil company, it could also add strain to government finances.

A single bill could establish a range of acceptable fuel prices. In the event that international fuel prices go above these rates, the government could compensate the actors involved in the distribution of the fuel.

According to the document, funds would be sourced from many sources including Petrobras dividends, royalties and oil company profits in Brazil.

It also proposes to create a program of motor fuel assistance for families earning less than 3 times Brazil’s minimum wages, and an assistance program that will assist self-employed individuals transport drivers including truckers.

However, Petrobras does not seem to be forced to make any losses. This is a good thing for them.

Second bill: ICMS State Tax Calculation Changes. Simplified taxation system.

According to the latest draft, Brazilian states will determine tax rates. They must also meet some requirements such as uniformity in the country. But they are able to distinguish between products.

This bill creates an opportunity for exceptional adjustments in case rates suddenly change.

While the proposals are still being considered by the lower house of the parliament, they come as leaders from government meet in Brasilia in order to discuss ways to protect consumers against rising fuel costs, which have soared globally in the wake of the conflict in Ukraine.

Brazilian President Jairbolsonaro declared on Thursday that he plans to sign the bill on state taxes into law, if approved by the country’s lower houses.

Bolsonaro, who was formerly known as Petroleo Brasileiro SA criticized Petrobras for partly pegging domestic fuel costs to international rates.

Petrobras did however announce on Thursday that it will raise fuel prices at its refinery gate to offset fuel shortages.

Reuters had reported earlier this week that officials from the Economy Ministry opposed fuel subsidy, saying they could damage the country’s fiscal credibility.

After having increased more than 6 percent earlier, Brazil’s preferred shares of Petrobras were up 3.5%.

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