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BRASILIA (Reuters) -The Brazilian government is set to resume the collection of federal taxes on fuels this week, the Finance Ministry said on Monday.
According to the ministry, the tax revenues from fuels will be 100% recovered with the end of the waiver. The rate on fossil fuels will be higher than biofuels, as before the exemption.
The announcement marks a win for Finance Minister Fernando Haddad in a dispute between his ministry and members of Lula’s Workers Party, who favored extending the waiver.
The measure to exempt federal taxes levied on fuel was launched by former President Jair Bolsonaro last year as he sought to boost his popularity by lowering prices ahead of a re-election bid.
But President Luiz Inacio Lula da Silva, who ended up defeating the far-right leader in an October vote, extended the tax waiver on diesel and biodiesel until December of this year, and on gasoline and ethanol until February.
With the return of the taxes on gasoline and ethanol, Haddad’s team will have a reinforcement of approximately 29 billion reais ($5.59 billion) in federal revenues this year. It is part of a set of measures seeking a reduction of this year’s primary deficit to below 100 billion reais.
The end of the waiver is seen positively by the ethanol industry, since without taxes the biofuel loses competitiveness against gasoline.
($1 = 5.1850 reais)
(Reporting by Victor BorgesEditing by Chris Reese and David Gregorio)