FISCAL REFORM OF FUEL REGULATION IN BRAZIL: RECENT DEVELOPMENTS AND ENVIRONMENTAL IMPLICATIONS

Internationally the fossil fuel-based energy sector now faces increasing uncertainties due to changes in its fiscal regulation, prompted by pressure for environmental regulation. These changes typically eliminate some taxes at the beginning of the oil production chain, but compensate for these by in...

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Bibliographic Details
Published in:Energy & environment (Essex, England) England), 2005, Vol.16 (6), p.1009-1027
Main Authors: HINOSTROZA, Miriam, SAUER, Ildo Luis, GUERRA, Sinclair M-G
Format: Article
Language:English
Subjects:
Alcohols
Applied sciences
Energy
Energy economics
Energy policy
Environmental conservation
Environmental regulation
Exact sciences and technology
Fossil fuels
Fuel oils
Gasoline
Gasoline taxes
General, economic and professional studies
Industrial refining
Oil industry
Regulatory reform
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Summary:Internationally the fossil fuel-based energy sector now faces increasing uncertainties due to changes in its fiscal regulation, prompted by pressure for environmental regulation. These changes typically eliminate some taxes at the beginning of the oil production chain, but compensate for these by increasing taxation on consumption. In Brazil, fiscal reform proposals focus not on environmental arguments but on the elimination of excess levies and red tape and on increasing equity across income classes. However, liberalization process of oil and gas industries in Brazil has led to modifications in fuels taxation. This article discusses current Brazilian fiscal policy as related to fossil fuels, explaining the nature of recently introduced contribution for economic regulation (Contribuição de Intervenção ao Domínio Econômico, CIDE) and the impacts on price formation. It also shows how those modifications tend to include external costs from activities in the fuel sector; through revenues from a levy earmarked for two purposes: i) funding investments in projects deemed to be environmentally beneficial, and, ii) improvements in road infrastructure aimed at reducing emissions from transportation. Some ideas on how to improve use of the levy to perk up fuel alcohol competitiveness are also discussed.
ISSN:0958-305X
2048-4070
DOI:10.1260/095830505775221560