Fuels exempt from federal tax may impact ethanol and sugar sector

Sao Paulo: The decision taken by Brazil’s new President Luiz Inacio Lula da Silva to continue with the exemption of fuel from the federal tax will negatively impact the sugar and ethanol industry of the country said analysts.

The sugar and ethanol industry as well as the international sugar traders were expecting the government to impose federal taxes on gasoline and ethanol after the new government takes charge.

But after resuming charge, first step government took on Monday to publish a decree keeping the fuels exempt.

According to the Reuters, Broker Marex said, “politics has beaten economics. We’re expecting that the taxes on gasoline and ethanol would resume from January 1 but now it seems they will not.”

City Research said, “This will hurt the sugar and ethanol sector as it keeps ethanol below the market forecast and it was expected the ethanol prices would increase by January 2023.”



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