The federal government's increase in subsidy for gasoline, ethanol, and road diesel took effect on Thursday. The measures were announced by President Luiz Inácio Lula da Silva less than a month before the first round of the presidential elections, generating discussions about the timing of the decision.
The government raised the benefit for gasoline from R$ 0.44 to R$ 0.63 per liter, representing a significant increase in the subsidy. At the same time, there will be a reduction of R$ 0.19 per liter in the case of ethanol. Petrobras, the state-controlled company, announced the previous night an increase of R$ 0.19 per liter in gasoline, effective from the same day.
The subsidy on gasoline was ending on Wednesday, and the government replaced direct payments to producers and importers with a tax break (PIS/Cofins), which will be even larger than the previous model. In the case of ethanol, the tax will be fully eliminated. Both benefits are valid for one month, running from September 10 to October 9.
Lula also signed a provisional measure to formalize the changes, which represent an effort by the government to contain the rise in fuel prices on the eve of the elections.
