Brazil’s Rio state implements new tax on oil and gas production

Brazil’s Rio de Janeiro state, facing a budget shortfall caused in part by plunging oil prices, imposed new taxes on petroleum and natural gas on Thursday, a move critics say will slash investment in an already battered industry.

Brazil’s economy is suffering its worst recession in decades, while a corruption scandal at Petrobras, as the state oil company is known, has choked off investment and delayed new output.

Rio de Janeiro state’s financial crisis has reached a point where universities and health services have suffered cuts and many public servants have not been paid in more than a month. The sick have been turned away from hospitals.

Rio de Janeiro, responsible for 67 percent of Brazil’s crude output and 40 percent of its natural gas, will charge a flat tax of 2.71 reais ($0.69) on every barrel of oil and gas produced in the state. The government hopes the tax will raise about 1.84 billion reais ($476 million).

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