Brazilian President Michel Temer said on Saturday the government has no plans to increase fuel taxes, a day after state-run oil company Petrobras announced a drop in fuel prices.

Friday’s price cut by Petroleo Brasileiro SA marked a significant shift following years in which politically driven pricing cost the company billions of dollars. Temer’s comments may dispel market speculation that the government would seek to increase the CIDE fuel tax as a way to make up for lost revenue.

“The CIDE, no,” he told reporters during an official visit to India. “There are no plans at this moment for that.”

Temer, who replaced impeached President Dilma Rousseff following her ouster in August for budget irregularities, said any tax increase at present goes counter to efforts by the new government to rein in public spending, particularly through a proposed constitutional amendment that would cap expenditures.

“When we thought about a ceiling on public spending, we thought precisely about avoiding any new type of tax,” he said.

Despite the drop in oil prices worldwide in recent years, Petrobras’ cut was the first downward change in Brazilian fuel prices since 2009. The new cut, in effect as of Saturday, reduced prices for diesel by 2.7 percent and gasoline by 3.2 percent.

Source: www.reuters.com