Brazil Zeroes Gasoline Taxes for 30 Days Before Runoff

Brazil gasoline taxes at the federal level fell to zero on Friday 9 October, when the government cut them for 30 days. The decree, announced by the Finance Ministry in Brasília, raises the tax relief to R$0.89 a litre (about US$0.18). It matters to US readers because it shows how hard Brazil is leaning on public money to shield drivers from oil above US$100 a barrel.

The same package raises subsidies for ethanol producers and for companies that import diesel. Together, the new measures will cost R$5.2 billion (about US$1.04 billion) over the next 30 days, according to the government figures reported by Agência Brasil, the state news agency.

The timing is political as well as economic. The relief arrives 16 days before the 25 October presidential runoff. All conversions in this article use the Central Bank of Brazil’s PTAX rate of R$4.9892 per US dollar on 9 October.

The decree extends a gasoline tax break that expired on 9 October under Decree 13.116/2026. It now removes three federal levies in full: PIS/Pasep, Cofins and Cide-Combustíveis.

According to the Finance Ministry, the cut rises from R$0.63 a litre (about US$0.13) to R$0.89 (about US$0.18) on gasoline A, the pure fuel sold by refineries before blending. Of that, R$0.79 (about US$0.16) comes from PIS/Pasep and Cofins and R$0.10 (about US$0.02) from Cide. The ministry says the new level matches February 2026, before the conflict in the Middle East began.

Hydrated ethanol, sold at the pump as an alternative to gasoline, keeps its zero rate of PIS/Pasep and Cofins, worth R$0.19 a litre (about US$0.04). The subsidy for ethanol producers rises from R$0.251 a litre (about US$0.05) to R$0.4287 (about US$0.09). The ministry says this keeps ethanol competitive once gasoline is fully tax-free.

For diesel, an ordinance due on Tuesday 13 October adds R$1.40 a litre (about US$0.28) for importers of road diesel. That sits on top of the R$2.12 (about US$0.42) already in force, also for 30 days. The ministry says 33% of the diesel Brazil consumes is imported.

The Ministry of Mines and Energy says diesel supply for October is secure. It puts demand at about 3.95 billion litres against confirmed supply of 4.18 billion litres. National stocks of 1.94 billion litres cover about 15 days of demand.

Bruno Moretti, the planning and budget minister in President Luiz Inácio Lula da Silva’s government, said Brent crude had passed US$100 a barrel, from about US$70 before the conflict. Refining margins abroad have also risen.

The Finance Ministry adds a third reason: the gap between the import parity price and the price charged by domestic producers has widened. In plain terms, fuel bought abroad costs more than fuel sold at home, which squeezes importers.

Dario Durigan, the finance minister, said the government would use higher oil revenue to protect the population. The Planning Ministry says the gasoline and ethanol relief is offset by extraordinary federal oil income, so the measures are fiscally neutral. It says they are temporary and apply only in 2026.

Moretti also warned fuel sellers. “Price freedom is not the same as freedom to abuse prices. We will stay vigilant,” he said, as quoted by CNN Brasil. Consumer protection agencies coordinated by Senacon, the Justice Ministry’s consumer office, inspected 11,140 fuel stations and 463 distributors between 9 March and 5 May, the Finance Ministry says.

Not everyone is convinced. Edmar de Almeida, a professor at the Energy Institute of the Pontifical Catholic University of Rio de Janeiro (PUC-Rio), told CNN Brasil the policy is “unsustainable from a fiscal point of view.” He estimated that gasoline would exceed R$9 a litre (about US$1.80) if all support were removed.

Flávio Bolsonaro, a senator for Rio de Janeiro from the conservative Liberal Party (PL) and Lula’s opponent in the runoff, called the fuel measures an electoral “stroke of the pen.” Lula belongs to the left-wing Workers’ Party (PT). The package follows a separate credit covered in Brazil Adds US$1.5 Billion to Fuel Subsidies .

For drivers and visitors renting cars, the effect at the pump should be modest. The government expects the average gasoline price to fall by up to R$0.26 a litre (about US$0.05), CNN Brasil reports. The average stood at R$6.54 a litre (about US$1.31), or roughly US$4.96 a gallon, according to regulator ANP data cited by the outlet.

Investors in Petrobras should watch the gap between world prices and the prices the company charges at home. The government itself names that gap as a reason for the package, and it shapes refining margins.

For fuel exporters and traders, the larger diesel subsidy is meant to keep imports flowing into Brazil. It arrives as Washington eases rules on Russian diesel, covered in Brazil Watches as US Clears Russian Diesel to April 7 . Brazil gasoline taxes are now a campaign issue, so expect the debate to sharpen before the vote.

It is not known how much of the cut fuel stations and distributors will pass on to drivers. Moretti said that depends on a complex market.

The government has not said whether Brazil gasoline taxes will return after 30 days or the relief will be renewed. The ministry says it can be extended, and that period ends after the 25 October runoff .

The exact text of the diesel ordinance is not yet public; it is due on Tuesday 13 October. We found no Petrobras statement on refinery prices linked to the package.

The government expects the average pump price to fall by up to about US$0.05 a litre. The final effect depends on whether stations and distributors pass the tax cut on.

The decree runs for 30 days from 9 October. The Finance Ministry says it can be extended, and it describes the measures as temporary and limited to 2026.

The federal government. It says the gasoline and ethanol relief is offset by extraordinary oil revenue, while the extra diesel import aid costs about US$320 million over 30 days.

Sources: Brazil Ministry of Finance, decree announcement , 9 October 2026; Agência Brasil, gasoline taxes zeroed , 9 October 2026; CNN Brasil, expected pump price effect and analyst reaction , 9 October 2026; CNN Brasil, Flávio Bolsonaro remarks , 9 October 2026; Central Bank of Brazil, PTAX rate for 9 October 2026.

Editorial responsibility: Matthias Camenzind , Editor-in-Chief · Editorial standards · Report an error