To curb inflation, Brazil’s Economy Ministry announced coffee, margarine, cheese, pasta, sugar, soyoil and ethanol import taxes are suspended until the end of the year. The ethanol import tax suspension will lower gas prices by 4.1 cents per liter, according to the Brazilian government. Import taxes on capital goods, computer and telecommunication products will be permanently reduced by 10%. The tax cut is expected to cost $202.8 million.
However, Reuters reported some analysts were skeptical of the practical effect of the cuts and said it was more political than business. Luiz Fernando Roque, an analyst for Safras & Mercado, explained soyoil demand has already dropped and the country could reduce exports. Brazil already purchases soyoil from Argentina with no taxes. He noted it would have been more interesting if soymeal was on the list. Imported ethanol prices with no taxes still would be 8% to 10% higher than locally produced fuel. Locally-produced ethanol prices will likely drop when sugarcane crush starts in April. Brazil is also the top exporter of sugar and has the lowest sugar price globally.
