Brazil’s state-controlled oil giant Petrobras informed markets on Tuesday of a reduction in the price of gasoline and diesel sold by its refineries to distributors. The news came shortly after Finance Minister Fernando Haddad told journalists in Brasília that the government had decided to reinstate federal PIS/Cofins taxes on gasoline and ethanol.
These taxes had been scrapped by former President Jair Bolsonaro a few months before the 2022 presidential election, in an attempt to boost his chances of winning another term.
Once in office, President Luiz Inácio Lula da Silva extended the tax exemption by executive decree, hoping to buy time and find a new way to mitigate the impact of international fuel prices on the domestic market.
But that decree expired on Tuesday, leaving the government in an impasse: Mr. Haddad’s team supported the return of taxes, while political allies called for the tax cuts to be extended once more, fearing negative repercussions among voters.
While the price of gas is not necessarily the best metric for understanding the economy as a whole, the ubiquity of fuel and its direct impact on people’s monthly budgets make it an easy shorthand for the broader economic scenario. What’s more, the truckers’ strike in 2018 propelled the importance of fuel...
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