UPDATE 1-Bolsonaro proposes new rules for fuel taxes set by Brazilian states | Reuters

Brazilian President Jair Bolsonaro on Friday sent a bill proposal to Congress that would alter how state fuel taxes are set, in order to reduce volatile pump prices following a threat by trucker drivers to strike over high diesel costs.

In a statement, Bolsonaro’s office said under the proposal states would need to submit proposed ICMS tax rates on fuels to the National Fiscal Policy Council. Any increase in the tax would only go into effect after 90 days, to make the market more predictable, the statement said.

Truck drivers had threatened to strike on Feb. 1 but few followed through on the stoppage, following Bolsonaro’s remarks that he would take action to try to lower fuel prices.

The incident raised fears that Brazil may begin to intervene in how state-led oil firm Petroleo Brasileiro SA sets prices, as happened under previous governments.

Reuters was first to report that Petrobras, as the state firm is known, had revised its pricing policy to track international parity over a 12-month period instead of every three months, feeding concerns of interference.

Petrobras, Bolsonaro and other government officials have denied any interference in how the company sets fuel prices. (Reporting by Lisandra Paraguassu and Jake Spring Editing by Marguerita Choy)

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