Full Breakdown
Lula Announces Fuel Tax Cuts and Diesel Subsidy Ahead of Election
9/10/2026, 7:26:52 AM
Fuel-price relief measures unveiled
On September 9, President Luiz Inácio Lula da Silva signed a decree and a provisional measure that lower federal taxes on gasoline and ethanol and add a subsidy for road diesel. The tax cuts reduce PIS/PASEP and Cofins levies on gasoline imports and sales by 0.63 real per litre and on ethanol by 0.19 real per litre. A diesel subsidy of 1 real per litre is layered onto an existing support of roughly 1.12 real per litre, with the new benefits slated to last for about 30 days.
Context of rising oil prices and election stakes
The measures come as Brent crude traded near $100 per barrel after attacks on oil facilities and shipping in the Middle East heightened global supply concerns. Higher pump prices have become a sensitive issue for voters ahead of the upcoming first-round presidential election, where Lula seeks a fourth, non-consecutive term against right-wing challenger Flávio Bolsonaro.
Fiscal impact and funding mechanism
Planning and Budget Minister Bruno Moretti estimated the gasoline-and-ethanol tax cuts will cost roughly 2 billion reais per month, while the diesel subsidy adds about 5 billion reais per month, bringing the monthly fiscal outlay to around 7 billion reais. The government expects the extra spending to be offset by about 10 billion reais in additional monthly revenue from higher oil-related taxes and royalties, given Brazil’s status as a net oil exporter. An executive order also authorizes 6.6 billion reais in extraordinary spending to cover existing subsidies, with 5.6 billion reais earmarked for diesel support.
Official statements & quotes
Lula framed the action as protection for consumers: “We’re not going to allow this irresponsible war to hit your pocket,” — Luiz Inácio Lula, brazilian president . Moretti said the administration will assess whether the existing 1.12-real-per-litre diesel subsidy should be continued: “We will evaluate whether we can remove the 1.12-real-per-liter subsidy on diesel or if it needs to be renewed,” — Bruno Moretti, budget minister . He also stressed that the program is not “populist”: “They don’t have a populist goal,” — Bruno Moretti, budget minister . Finance Minister Dario Durigan described the incentives as temporary and limited, noting they will be financed by additional oil revenues, including a tax on exports.
