Brazil’s government announced a temporary suspension of gasoline taxes on Friday, a move aimed at easing fuel prices just two weeks before the runoff presidential election scheduled for October 25. Incumbent President Luiz Inacio Lula da Silva, seeking a fourth term, is facing right-wing challenger Flavio Bolsonaro in the contest.

The tax waiver will last for 30 days and affects a gasoline tax previously set at 0.89 reais (approximately $0.18) per liter. Alongside this, the government has expanded subsidies for diesel importers, a critical measure given that diesel is the main fuel used in Brazil’s freight transport sector. According to a statement from the presidency, these steps are intended to keep fuel imports viable during a period of constrained supply, largely influenced by the global surge in oil prices tied to the ongoing conflict in the Middle East.

The fiscal impact of these relief measures is expected to be balanced by Brazil’s increased revenues from oil exports, the government stated.

The runoff election comes after the first-round votes on October 2, where Flavio Bolsonaro received 47% of the vote and Lula secured 45%. Flavio Bolsonaro, the eldest son of former president Jair Bolsonaro, has criticized Lula’s administration for not effectively managing the cost of living, particularly in terms of inflation and fuel prices. On Friday, Brazil’s inflation rate was reported to have risen by 0.82% in September.

In response to the tax suspension announcement, Flavio Bolsonaro described Lula’s decision as "irresponsible," cautioning that the temporary relief might ultimately lead to higher diesel prices after the election. He accused Lula of “placing a bomb” on consumers, implying that the government’s short-term measures could have adverse long-term effects.

The tax relief and subsidy changes are part of Lula’s broader strategy to address economic challenges amid an international environment of rising energy costs, aiming to maintain public support as the election approaches. Observers note that fuel prices remain a highly sensitive issue in the country, affecting transportation costs and inflation dynamics.