Latin America Advisor

Energy Advisor

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Will Taxes on Fuel Reduce Brazil’s Fiscal Deficit?

The Brazilian government recently resumed collecting taxes on fuel, a move pushed by Finance Minister Fernando Haddad. // File Photo: Brazilian Government.

The Brazilian government recently resumed collecting taxes on fuel. Former President Jair Bolsonaro introduced the exemption on the federal taxes ahead of the country’s presidential election in a bid to boost his popularity. Finance Minister Fernando Haddad, who pushed for the fuel taxes to resume, was at odds with members of President Luiz Inácio Lula da Silva’s Workers’ Party, who favored extending the waiver. Taxes on gasoline and ethanol will generate some 29 billion reais ($5.59 billion) in federal revenue this year and will assist in reducing the country’s primary deficit to less than 100 billion reais. How will lifting the exemption affect Brazil’s economy and the energy sector? Will Lula’s popularity suffer as a result?

Fernando Xavier and Leonardo Martins, partners at Machado Meyer: “There is a broad consensus that an indiscriminate tax exemption over fossil fuels is not a good policy. In addition to the negative impact on the country’s fiscal stability, it creates an anachronic incentive to consumption of fossil fuels at a time when the world is engaging huge efforts on energy transition to a greener economy. It also fails to differentiate those sectors of economy that mostly demand government protection (such as public transportation, essential logistics and low-income families) from sectors that are more capable of absorbing price fluctuation. A better policy for fuel pricing would need to consider how to direct federal revenues to those sectors more in need of protection, while at the same time creating the kind of incentives to boost the country’s transition to a more renewable energy matrix. Therefore, …”

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Venezuela to Send Cuba 1.53 Million Barrels of Oil

Venezuelan state oil company PDVSA, headed by Pedro Tellechea, on Monday was loading the Panama-flagged supertanker Nolan with fuel and crude bound for Cuba. The oil seeks to aid the island following repeated electrical outages this year. // File Photo: @TellecheaRuiz via Twitter.
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About the Energy Advisor

A sister publication of the Inter-American Dialogue’s daily Latin America Advisor, the weekly Energy Advisor captures fresh analysis from business leaders and government officials on the most important developments in oil and gas, biofuels, the power sector, renewables, new technologies, and the policy debates shaping the future of energy in the Western Hemisphere and beyond. To subscribe or for more information, contact Gene Kuleta, editor of the Advisor, at

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