Who will pay for Brazil’s subsidies to diesel?

</p> <p>Ironically, even the Ministry of Transportation – which defends the truckers’ demands – will suffer major budget cuts, with budgets for patrolling in federal roads and infrastructure improvement projects being slashed. Here are the sectors that will most suffer from the cuts:</p> <hr /> <p><img class="alignnone size-large wp-image-4709" src="https://brazilian.report/wp-content/uploads/2018/06/export-hQQTZ-1-990x1024.png" alt="diesel prices" width="990" height="1024" srcset="https://brazilian.report/wp-content/uploads/2018/06/export-hQQTZ-1-990x1024.png 990w, https://brazilian.report/wp-content/uploads/2018/06/export-hQQTZ-1-290x300.png 290w, https://brazilian.report/wp-content/uploads/2018/06/export-hQQTZ-1-768x794.png 768w, https://brazilian.report/wp-content/uploads/2018/06/export-hQQTZ-1-610x631.png 610w, https://brazilian.report/wp-content/uploads/2018/06/export-hQQTZ-1.png 1180w" sizes="(max-width: 990px) 100vw, 990px" /></p> <hr /> <p>All of that price-controlling policy, however, is only good for the price at the refineries. How much gas stations will charge consumers is up to them – at least in theory. The president’s chief of staff, Eliseu Padilha, announced that the administration will fine stations that don’t relay the diesel price cuts to the final consumer. Fines can reach up to BRL 9.4 million.</p> <h3>Loss of competitiveness</h3> <p>Business associations complain that the government’s solution to the crisis will slash incentives for exporters – which will reduce the competitiveness of Brazilian companies abroad and increase their costs. The National Industry Confederation released a statement saying the cuts to government tax exemption programs threaten Brazilian exports and the country’s GDP.</p> <p>The National Association of Chemical Industries says that alteration in the sector’s special tax regimen, which allowed industries to pay fewer taxes, will hit Brazilian companies hard and inflate prices. According to the entity, as taxes increase, prices practiced by foreign companies become more attractive, meaning that Brazilian products will lose market share.</p> <h3>Minimum freight prices</h3> <p>On Wednesday, the National Land Transportation Agency (ANTT) published a table of minimum freight prices to be used from now on. Despite it being a request from truckers, the table could make their lives harder due to its complexity and ANTT’s lack of structure to enforce its rules.</p> <p>The table establishes a system for different prices according to the type of cargo (for example, if it’s solid, liquid, refrigerated, or dangerous to transport) and distance. Prices are increased with every 100 kilometers traveled.</p> <p>According to representatives of the National Agricultural Confederation (CNA), it is likely that the prices set by ANTT will not be used in the real world. “The government wasn’t clear about what the penalty would be for transgressions, nor about how ANTT will monitor freight prices across the country. Today, it has no structure to do that,” CNA’s infrastructure councilor Elisangela Lopes <a href="https://www1.folha.uol.com.br/mercado/2018/05/novo-frete-minimo-pode-piorar-vida-do-caminhoneiro.shtml">told</a> <em>Folha</em>.</p> <p>One of the biggest problems is the so-called “return freight,” when a trucker takes cargo to a port and seeks another job to not return home with an empty vehicle. In these cases, truck drivers usually accept lower rates. If a minimum is imposed, companies are expected to hire labor from formal transportation firms rather than self-employed truckers.</p> <p>“The intention is there, but it could cause more damage than good,” says the Association of Brazilian Cereal Producers.