Brazil Scraps Petrol Tax Before Runoff Election

Brazil’s government temporarily scrapped petrol taxes on Friday, just two weeks before incumbent President Luiz Inácio Lula da Silva faces right-wing challenger Flávio Bolsonaro in a decisive runoff election.

The administration suspended the 0.89 reais ($0.18) per litre petrol tax for 30 days to mitigate rising fuel costs triggered by ongoing Middle East conflicts.

Seeking his fourth term, Lula also expanded subsidies for diesel importers to protect domestic freight transport and stabilise national supply lines during the election cycle.

The presidency confirmed that extraordinary revenues from oil exports will fully offset the fiscal impact of the tax freeze.

The move follows an October 1 first-round vote where Bolsonaro led with 47 per cent over Lula’s 45 per cent.

High inflation figures—which hit 0.82 per cent in September—have made the cost of living a central battleground heading into the October 25 runoff.

“The objective is to ensure that imports remain viable at a critical moment for supply,” the presidency said.

Bolsonaro condemned the tax cuts as a short-sighted political ploy, labelling his opponent “irresponsible.”

The challenger warned voters that Lula was placing a financial “bomb” on consumers that would trigger sharp diesel price hikes immediately following the election.