Brazil's Lula Decrees Extension For Tax Exemption On Fuels

• Brazil's newly sworn-in President Luiz Inacio Lula da Silva signed a decree on Sunday, Jan. 1, extending for 60 days an exemption for fuels from federal taxes, a measure passed by his predecessor aimed at lowering their cost.
• The exemption from federal taxes on fuel represents a revenue waiver of 52.9 billion reais per year, and Economy Minister Fernando Haddad had said that it would not be extended, creating a division in the new cabinet.
• Earlier on Sunday, Senator Jean-Paul Prates, who is expected to be named chief executive of state-run oil company Petrobras, told reporters that an extension of the exemption would go ahead and last 60 days.
• Prates said the exemption could be resumed by the new government in a "much more comfortable" way. He has said that one option under study was an extension for six months or until the end of the year for tax exemptions on diesel and liquefied petroleum gas.
• The extension of the tax exemption on fuels should ease inflation pressures for consumers and businesses but could lower revenues collected by the government if the gap is not filled by other taxes. 

 

(Source: Reuters)