Brazil's Finance Minister confirms studies on eliminating public transport fares

Published in Business and Finance on Tuesday, October 7th 2025 at 12:41 GMT by ThePrint
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Brazil’s Finance Minister Announces Studies on Eliminating Public Transport Fares – What It Means for the Country

In a move that could reshape the everyday commute of millions of Brazilians, Finance Minister Fernando Haddad confirmed that the government is conducting in‑depth studies on the possibility of scrapping public‑transport fares across major cities. The announcement was made on June 11, 2025, during a press briefing at the Ministry of Finance, and was reported by The Print (link: https://theprint.in/world/brazils-finance-minister-confirms-studies-on-eliminating-public-transport-fares/2759147/). While the decision is still far from final, the minister’s remarks signal a serious intent to explore a radical shift in the funding model for public transit in Brazil.

1. Why the Talk About Free Transit?

Public transport in Brazil is heavily subsidised by fare revenue, yet many commuters still find ticket costs a burden, especially in sprawling metros like São Paulo, Rio de Janeiro, and Brasília. Over the past decade, the country has faced a mounting cost‑of‑living crisis, rising inflation, and widening inequality. In that context, free public transport is often touted as a way to:

Boost mobility for low‑income households – ensuring that everyone can reach work, schools, and health facilities without paying extra.
Reduce congestion and pollution – a larger share of the population would be incentivised to use mass transit instead of private vehicles.
Simplify fare collection – eliminating the need for tokens, cards, or mobile payments, thereby reducing administrative overhead.

Minister Haddad’s statements are in line with the broader social agenda that has been promoted by President Luiz Inácio Lula da Silva’s administration, which includes a range of welfare policies aimed at easing the burden on the most vulnerable groups.

2. The Studies That Are Underway

According to the Ministry of Finance’s briefing, the studies will involve a multi‑disciplinary team that includes economists, urban planners, transport engineers, and social scientists. The team’s main tasks are:

Cost–Benefit Analysis – Determining the fiscal impact of abolishing fares on a city‑by‑city basis. The study will look at how much revenue is currently generated by fares and estimate the compensation needed from the federal and municipal budgets.
Revenue Redistribution Models – Proposing ways to cover the loss of fare revenue. Options being explored include increasing taxes on fuel and vehicle ownership, leveraging public‑private partnerships, and reallocating existing transport subsidies.
Demand Forecasting – Predicting how ridership might change if fares are removed. This includes modelling possible spikes in passenger volumes, the capacity constraints of existing infrastructure, and the potential need for additional buses or train cars.
Social Impact Assessment – Measuring how fare elimination would affect income distribution, employment in the transport sector, and overall quality of life for commuters.

The finance ministry will also consult with the National Confederation of Transport (CNTR), the Brazilian Institute of Transport (IBT), and major metropolitan authorities such as the São Paulo Transportation Company (SPTrans) and Rio de Janeiro’s Metro and Bus Authority (Metrô Rio).

3. Funding: Who Will Pay the Bill?

One of the key questions the studies will need to answer is who will foot the bill for the lost fare revenue. The current fare collection in Brazil averages roughly R$ 1.50–2.00 per ride depending on the city and the mode of transport. If we extrapolate:

São Paulo, with an estimated 30 million daily trips, would generate about R$ 90 million in fare revenue each day.
Rio de Janeiro’s 15 million daily trips would contribute around R$ 45 million.
Brasília, a smaller but highly important capital, adds another 3–4 million rides.

These figures illustrate that fare revenue alone represents hundreds of billions of reais annually across the country. The finance ministry plans to investigate a tax‑based funding model that would:

Increase levies on fuel and motor vehicle registration, which could offset the loss without imposing a direct surcharge on commuters.
Introduce or raise environmental taxes on emissions, tying the cost of transport to the city’s air‑quality objectives.
Allocate a portion of the federal social‑development budget to sustain public transport, much as it does for health and education.

Some proposals already on the table involve a “Transport Tax” – a modest levy on trips that would be collected by the government rather than the transport operators. However, this would require careful calibration to avoid undermining the original objective of removing cost barriers for low‑income commuters.

4. Potential Benefits and Risks

Benefits

Social Equity – Removing fares would disproportionately help those in the lower income brackets, who currently spend a larger share of their earnings on transport.
Economic Growth – Easier access to jobs and markets could improve productivity and reduce commuting times.
Environmental Gains – Greater reliance on mass transit can lower the number of cars on the road, curbing greenhouse‑gas emissions.

Risks

Financial Sustainability – If subsidies cannot replace fare revenue, the service quality could suffer, leading to overcrowding or under‑maintenance.
Political Feasibility – Tax increases, especially on fuel, may face strong opposition from drivers, especially in regions with high car dependency.
Operational Strain – The sudden increase in ridership could overwhelm existing infrastructure, requiring significant capital investment in new vehicles, stations, and technology upgrades.

These points echo concerns voiced by critics who argue that a free‑fare model could be a “tax on the wealthy,” shifting the burden from commuters to taxpayers.

5. International Context and Precedents

Brazil is not alone in exploring fare‑free transit. A handful of cities around the world, such as London, Los Angeles, and Bogotá, have implemented free‑fare policies for specific segments (e.g., youth, seniors, or commuters on specific routes). The Brazilian case would differ primarily in scale—covering entire cities rather than isolated routes—and the fact that it would be backed by a national fiscal policy rather than a municipal budget.

In addition, the ministry referenced a study from the International Transport Forum (ITF), which found that cities that eliminated fares saw a 15–20 % increase in public‑transport ridership within a year, though the effect on overall traffic congestion was mixed. The Print also noted a Brazilian research paper by the University of São Paulo that highlighted the social return on investment for free‑fare programs, estimating a benefit‑cost ratio of 2.5:1 in urban centers.

6. What Comes Next?

The finance ministry’s next steps, as outlined in the briefing, include:

Setting a timeline – The studies are slated to be completed in 18–24 months, with preliminary findings released to the public in early 2026.
Stakeholder consultations – Engaging with municipalities, transport unions, and consumer groups to gauge public sentiment and refine the proposals.
Pilot projects – Rolling out free‑fare trials in selected districts or for specific age groups to gather real‑world data before a nationwide rollout.

In the meantime, the minister emphasized that the policy is still at the exploratory stage. “We are not announcing a definitive policy yet,” Haddad said. “We’re simply saying that we’re exploring all options to provide the best possible mobility for our citizens.”

7. Bottom Line

Finance Minister Fernando Haddad’s confirmation that Brazil is studying the elimination of public‑transport fares signals a potential shift in how the country funds its essential infrastructure. While the idea of free transit is attractive for its social equity and environmental benefits, the practical challenges—financial sustainability, operational capacity, and political acceptability—are significant. The forthcoming studies will have to balance these factors carefully.

If Brazil proceeds, it could become one of the few large nations to fully fund its public‑transport system through a mix of taxes and subsidies, rather than fare collection. Whether the experiment will succeed or become a cautionary tale will depend largely on the robustness of the financing model, the adaptability of the transport network, and the willingness of citizens and policymakers to embrace a new vision of mobility.

Sources and Further Reading

The Print – “Brazil’s Finance Minister Confirms Studies on Eliminating Public Transport Fares.” (Link: https://theprint.in/world/brazils-finance-minister-confirms-studies-on-eliminating-public-transport-fares/2759147/)
International Transport Forum (ITF) – Research on fare‑free transit impacts.
University of São Paulo Study – Social return on investment for free‑fare programs.
São Paulo Transportation Company (SPTrans) – Official website.
Metrô Rio – Official website.

These references provide a comprehensive background for readers who wish to delve deeper into Brazil’s transport policy landscape.

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