Lula government publishes decree with subsidy of R$0.44 per liter of gasoline

President Luiz Inácio Lula da Silva published on Monday night (25) in an extra edition of the DOU (Official Gazette of the Union), a decree establishing a subsidy - a type of subsidy - of R$ 0.44 per liter of gasoline, amid the rise in fuel prices, caused by the war in the Middle East.

The value of the subsidy had already been anticipated last week by the Minister of Planning and Budget, Bruno Moretti. "We came to the conclusion that R$0.44 is today the most appropriate value per liter for the subsidy and should be enough to cushion the price shock we had in gasoline because it was lower than in diesel", he stated in the presentation of the government's bimonthly revenue and expenditure report.

The subsidy limit is up to R$0.89 per liter of gasoline, equivalent to the total federal taxes paid per liter on fuel - PIS, Cofins and Cide. The value of the subsidy, therefore, represents approximately half of this charge. A new subsidy for diesel was also announced, this time of up to R$0.3515 per liter.

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The subsidy will be paid directly to gasoline producers and importers, through the National Petroleum, Natural Gas and Biofuels Agency (ANP).

The cost of the measure will be close to R$1.2 billion per month, with an initial duration of two months. The effects have not yet been incorporated into the official Budget projections. According to the government, the bill will be offset by the increase in revenue from extra oil revenue - but, for this, the Executive needs authorization through a bill, which is being processed in Congress and has not yet been considered.

The subsidy calculation will be carried out by the ANP and the discount will have to be identified on the fuel sales price in the "Additional information" field of the electronic invoice.

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In the first package of measures, in the first half of March, the federal government zeroed PIS/Cofins taxation on diesel oil, authorized subsidies for domestic producers and increased taxation on fuel exports.

In the second wave of actions to contain the impacts of the rise in oil prices, associated with the war in Iran, there were also announcements in the diesel oil, liquefied petroleum gas (LPG) and airline sectors. Two new subsidies were created for diesel oil, both complementary to the R$ 0.32 per liter established by the March MP.

In the second half of April, the Lula government sent a complementary bill to the National Congress to allow extraordinary oil revenues to be used to reduce taxes on fuels. The reduction, if the text is approved, could occur in PIS/Cofins and Cide applied to diesel, ethanol, gasoline and biodiesel.

Source: CNN