There is bad news for drivers in Brazil

Brazil’s drivers got some bad news this week from Lula’s government. Those who were used to filling their cars with a little cheaper gasoline will have to adapt to the new reality of the country, because the prices of fuel at gas stations will increase.

According to the survey of Global Petrol Prices, Brazil may drop by more than ten positions in the ranking of the cheapest gasoline in the world. By the way, the survey monitors prices in 168 countries of the planet.

As a result, Brazil has the 29th cheapest gasoline in the world, that is, it is at the bottom of the table, among the nations with the lowest global values. However, with the increase in gasoline prices, Brazil would drop to at least 42nd place in the ranking, dropping 13 positions.

It should be noted that at the end of June 2022, when the national average price of gasoline at the gas station set a record, Brazil ranked 76th. At that time, the average price of one liter of gasoline in the republic was 7.39 rials.

In order to reduce the price of gasoline, the federal government passed an additional law that limited their collection ICMS: on various items, including fuel. Thus these clauses came to be considered essential, and charging a rate above the general rule was no longer constitutional.

In short, prior to this law, ICMS rates on fuel were in excess of 30% in some parts of the country. However, the law capped rates at 18%, which helped lower the price of these products.

Gasoline should go up in Brazil

According to a recent survey ANP:The national average price of gasoline was 5.07 roubles, which ranks Brazil 29th in the world ranking. However, the resumption of petrol filling by PIS/Cofins may push the national average up to BRL 5.41.

This new average gasoline price was predicted by the Brazilian Association of Fuel Importers (abicom:) First, it should be noted that the organization took into account the composition of gasoline sold at service stations of the republic, which has a mandatory mixture of 73% A gasoline and 27% anhydrous ethanol.

In addition, Finance Minister Fernando Haddad explained that the resumption of PIS/Cofins collection on gasoline and ethanol should trigger the following upload:

  • One liter of gasoline: R$ 0.47;
  • Liter of ethanol: BRL 0.02.

Thus, Abicom added 73% of R$0.47 (R$0.3430) and 27% of R$0.02 (R$0.0054) referring to gasoline and ethanol, respectively. The sum of these values ​​was R$0.3485.

However, the organization’s calculations also took into account the 13-cent drop in gasoline prices announced by Petrobras last Tuesday (28). “Because 73 percent of this gasoline is at the gas station [73% de R$ 0,13 são R$ 0,09], the impact will be R$0.09. With that, we reached BRL 0.25,” concluded Abicom.

If the price of fuel actually reaches 5.41 roubles, Brazil will have more expensive gasoline than sold in Argentina (5,084 roubles) and the United States (5,129 roubles). In fact, the Global Petrol Prices website list is maintained by energy price experts.

In short, the rating changes due to several factors, such as fluctuations in international oil prices and changes in energy and tax policies in each country, in addition to, for example, exchange rate fluctuations.

Increase in fuel prices

The federal government has met several times in recent weeks to decide whether to reimpose fuel taxes. On the one hand, the economic team supported the resumption of recruitment PIS / coffins on fuel in order to increase state revenues.

In short, the projected fiscal deficit in 2023 is BRL 231.5 billion. According to Finance Minister Fernando Haddad, this gap in public accounts could be reduced to R$100 billion if the government increases the collection of federal taxes such as PIS/Cofins on fuel.

However, the political wing fears that the image of President Luiz Inacio Lula da Silva (PT) will deteriorate with the increase in fuel costs. The concern is that Brazilians will blame the president for the increase.

There is also a fear of rising inflation, which increases the cost of living of the population. In summary, fuels have a great influence on the country’s inflation rate. With tax returns, inflation may rise more than expected, exceeding the target for the third year in a row.

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