Brazil makes official ethanol industry tax cuts

The Brazilian government made official tax cuts on May 9, which are designed to help the country’s ailing ethanol industry.
Cuts in federal sales taxes of Real 0.12 (US 0 .06) from the sector’s tax burden were formally published in the government’s official gazette.
The tax cuts, along with cheaper credit for sugar cane planting, renovation and storage, were announced on April 23, to help the industry regain competitiveness and boost production and investment.
Years of falling production and sales following low investment and bad harvests have damaged the industry.
Brazilian motorists have increasingly switched to gasoline in recent years as government price-caps on gasoline kept prices at the pump low, while ethanol prices varied, vulnerable to variations in supply and harvest.
Ethanol is a less efficient fuel than gasoline, but it typically costs less than 70% of the price of gasoline, making it a more economic fuel choice for flex-fuel cars, which make up about half of Brazil’s fleet.
(May 8, 2013)