Political Clash Erupts Over Diesel Price Hike and ICMS Tax Increase in Brazil

Brazil is witnessing a sharp political confrontation between Guilherme Boulos, Minister of the General Secretariat of the Presidency, and São Paulo Governor Tarcísio de Freitas over the upcoming diesel price increase scheduled for February 1, 2027. The diesel price per liter will rise from R$1.17 to R$1.30, marking an 11.1% increase, following a unanimous decision by the National Council of Fiscal Policy (Confaz), which includes representatives from all Brazilian states and the Federal District.

Boulos criticized Tarcísio for supporting the ICMS tax raise on diesel despite previous campaign promises to reduce taxes, highlighting the potential negative impacts on truck drivers and consumer goods prices. He also underscored the federal government's move to subsidize diesel at R$2.12 per liter for another 30 days to alleviate costs amid international oil price instability.

In response, Tarcísio defended the decision as a collective agreement involving PT-governed states and indicated that São Paulo has maintained its ICMS rate stable at 18% for four years, contrasting with tax hikes elsewhere. He accused Boulos of distorting information for political attacks, while Boulos countered by labeling Tarcísio’s stance as hypocritical and opportunistic.

This debate reflects the broader challenges facing Brazil’s economic policy under President Lula's fourth term, as opinions diverge on taxation and price control amid inflationary pressures.