The Brazilian government has committed to removing the CIDE excise tax on gasoline and diesel, to support the part-state-owned oil company Petrobas in doubling its output over the next five years and to offset the impact of new fuel price hikes.
According to a regulatory filing, Petrobas increased prices of gasoline by 7.83% and diesel by 3.94% from June 25, 2012.
Despite substantial increases in global prices in recent years, the company had not hiked domestic prices in six years, in support of government efforts to restrain inflation.
The introduction of a 0% CIDE tax rate aims to reduce losses racked up by Petrobas as the company channels hundreds of billions of dollars into a five-year expansion plan to double its output. In 2010, the company undertook the largest public offering in history, raising some USD70bn, to begin tapping Brazil's substantial offshore oil reserves..
TAGS: tax | inflation | Brazil | oil and gas
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