Chile vs. Brazil: Who kills progressive fuel taxes?

Fuel prices are rising in South America as local currencies weaken on the euro crisis. National governments have a choice: maintain fuel taxes, which are overwhelmingly progressive in countries where very few poor and most rich people have vehicles, or cut the fuel tax and make up the finance gap with some other sort of tax, which will quite likely be less progressive.

The same proposal has been made in the past week in Chile and Brazil. Of course everyone knows how this is going to play out. Chilean President Piñera, often referred to as a “fascist” by local lefties, is going to reward the rich, while Brazilian President Dilma Roussef, a former leftist guerrilla, will of course soak the rich.

Only not.

Brazil cuts its tax, ostensibly to rein in inflation. Instead it might consider reining in credit card interest that can exceed 200% per year, sucking the blood of the middle class and increasing money supply, accelerating inflation. Yes, I said 200%.

Meanwhile, the far-right UDI party in Chile presented a request today to cut the gasoline sales tax. They were shameless, saying that it would help not only the middle class, but also the neediest. That, despite a vehicle ownership rate of about 3% among the poorest quintile of Chileans. The government spokesman was blunt, saying, everyone knows we can’t cut that tax right now.

4 thoughts on “Chile vs. Brazil: Who kills progressive fuel taxes?

  1. sapitosetty Post author

    As you might guess, I really liked your post. But I think you’re mistaken if you think Venezuela has no fuel tax. From the Ley Orgánica de Hidrocarburos:

    3. Impuesto de Consumo General. Por cada litro de producto derivado de los hidrocarburos vendido en el mercado interno entre el treinta y cincuenta por ciento (30% y 50%) del precio pagado por el consumidor final, cuya alícuota entre ambos límites será fijada anualmente en la Ley de Presupuesto. Este impuesto a ser pagado por el consumidor final será retenido en la fuente de suministro para ser enterado mensualmente al Fisco Nacional.

    1. Francisco Toro

      3.1 Con lo recaudado por este impuesto se procederá a comprar cachitos para la oficina, si es que alcanza.

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