Brazil’s import tax cut on ethanol and sugar to have little impact, say analysts

Sao Paulo: The recent announcement of the Brazilian government to cut import tax on ethanol, sugar, and soy oil will have little impact and the decision is more politically motivated than business, said analysts.

The step was taken by the government in order to curb rising inflation.

Taking taxes on ethanol imports to zero from 18% would lower the gasoline prices by up to 0.20 real per litre, said President Jair Bolsonaro. According to local regulations, biofuel must be blended with gasoline. However, this move will have little impact for now, feel analysts.

As per analysts, the price of ethanol imported in Brazil without any tax would be 8% to 10% higher than the local ethanol, which will decline further after April when sugarcane crushing starts in the country.

According to the Reuters news report, Datagro’s analyst Plinio Nastari said, “The zero tax on sugar imports won’t have a practical effect
as Brazil is the number exporter in the world and also its cost of production is lowest across the globe.”


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