São Paulo slashes fuel taxes, calling the move a ‘great sacrifice’

fuels taxes
São Paulo Governor Rodrigo Garcia called a move to slash fuel taxes “a great sacrifice.” Photo: Alf Ribeiro/Shutterstock

Days after President Jair Bolsonaro ratified a law capping tax rates on essential goods and services such as energy, telecoms, and fuels, the state of São Paulo announced that gasoline tax rates will decrease from 25 to 18 percent as of Monday. 

With the reduction, local officials said the move will reduce prices at the pump by BRL 0.48 (USD 0.09) per liter. That would mean a 7-percent cut in average prices statewide. 

Governor Rodrigo Garcia says the reduction will be “a great sacrifice for the state.” Goods and services tax on fuels make up almost 10 percent of São Paulo’s revenue. Mr. Bolsonaro vetoed provisions in the bill that would guarantee compensation for revenue drops that affect health and education services.

The government is desperately trying to lower fuel prices at the pump in a push to revert Mr. Bolsonaro’s disadvantage in the presidential polls. However, as São Paulo Finance Secretary Felipe Salto told The Brazilian Report, the measure will not necessarily make fuel prices go down if Petrobras continues with its dollar-pegged pricing policy.