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Haddad | A Way to Subsidize Subways?

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Source: G1

Protests by unionists and faces in the multitude over the cost of public transportation and calling for an end to abuse of public funds by multinational engineering cartels have fallen on deaf ears in news coverage here today.

Correction: The march is scheduled for tomorrow.

Meanwhile, however, the mayor is proposing a tax policy innovation very much in step with the current marching song of the MPL — the  Free Pass Movement — and the labor federations.

São Paulo mayor Fernando Haddad (PT) said today that a R$ 0.50 tax per liter on gasoline would enable the reduction of public transport fares by R$ 1.20 according to a study commisssioned by the mayor’s office.

Realized by the Getúlio Vargas Foundation (FGV), whose results were cited by Haddad, the study points to the possibility of such a subsidy based on applying proceeds of a tax known as CIDE to fuel .

The mayor, who is a member of the PT and vice-president of the National Mayors Front, argued for what he called a “cross-subsidy” as an alternative for making public transport cheaper in the big cities. The plan is to find revenue sources based on other economic sectors.

Haddad also called for CIDE to be reformed as a municipal tax.

CIDE is a federal tax which, in the case of fuel, is applied to the importation and sale of petroleum and derivatives, natural gas, and ethanol. By law, the funds raised are dedicated to subsidizing fuel prices, financing environmental projects related to the petroleum sector, and financing transportation infrastructure. In June 2012, this tax was zeroed out with respect to fuels, in order to compensate for the 7.83% rise in gasoline and 3.94% in diesel prices at the refineries, in that same month.

Haddad received support from the newly conceived Conselho da Cidade [– a public-private citizen advisory council organized by the mayor and his party–] for this approach to fuel prices and transport subsidies.

“The FGV today announced preliminary data from a study it has been working on at the  request of the City since May of this year. We found that increased the CIDE on a liter of gasoline by $0.50 could sustain a public transport fare discount of R$ 1.20 off the price of a ticket”, said Haddad.

During the event,l organized by the NGO Nossa São Paulo, the mayor said repeatedly that preliminary data show that “the social demand for a decrease in transport fairs is possible [to satisfy], so long as there is a source to finance it. And the best source of financing it is one that inhibits the use of automobiles,” said Haddad, during the launching of the study, “Alternatives for the financing of transportation.”