Senate scraps taxes for motorcycles

Brazil’s Senate passed a resolution yesterday authorizing states to lift vehicle taxes on small-displacement motorcycles. 

The move is a reflection of current trends in motorcycle demand. Manufacturers association Abraciclo reported a 25-percent year-on-year increase in motorcycle production in May 2022. 

Soaring demand is likely the result of continuous hikes in fuel prices, as two-wheeled vehicles are cheaper to buy and consume less fuel than conventional automobiles.

Gasoline prices went up by 8 percent in the first half of 2022. Meanwhile, the price of ethanol — widely used in motorcycles — dropped 6.5 percent during the same period.

While demand is on the up, credit woes mean access to motorcycles remains low. Rising interest rates have made vehicle loans more expensive and the overall condition of the economy has driven 28 percent of Brazilian households to default. As a result, the nationwide rate of loan approvals dipped to 30 percent.

Senator Chico Rodrigues, who penned the resolution passed on Wednesday, expects motorcycle owners to reduce their spending on purchases by BRL 300 (USD 56), which is the equivalent of one-quarter of the monthly minimum wage. 

He argues the reduction will help middle- and lower-income citizens — which comprise 85 percent of motorcycle buyers and use them for work. Courier apps have been one of the biggest job-creating sectors in the country over the past few years. This week, a House committee began holding hearings to debate labor conditions for app workers.

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