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Saving Lives While Raising Revenue: Opportunities in Brazil’s Reform of Indirect Taxes to Improve Tobacco, Alcohol, and Sugar-Sweetened Beverages (SSBs) Excise Taxes
(Washington, DC: World Bank, 2024-11-04) Maldonado, N.; Blecher, E.; Fleischhaker, C.
Taxes and prices of tobacco products, alcoholic beverages, and sugar-sweetened beverages (SSBs) in Brazil are low compared to international peers. The ongoing landmark reform of indirect taxes (PLP 68/2024 and forthcoming Ordinary Law) provides an excellent opportunity to put in place well-designed excise taxes on tobacco, alcohol and SSBs.If well implemented, reforms of the tax structure and increases in tax rates can make them more effective at improving population health and raising additional tax revenue. Global evidence to support reforms is strong, supporting the use of well-designed and administered health taxes.Following global best practices, it is recommended that health taxes are focused on specific taxes or, when applied in mixed systems, that the specific taxes comprise a larger component of the excise tax than the ad valorem component. Tax rates, particularly for specific taxes, need to be increased significantly to align Brazil with the prices of international peers, and indexed to inflation plus three percentage points to protect real values of tax over time, and to reduce the affordability of tobacco, alcohol, and SSBs.
Distributional Impacts of Brazil’s Tax Reform: scenarios regarding Cesta Básica exemption
(World Bank, Washington, DC, 2023-10-31) Vale, Ricardo; Lara Ibarra, Gabriel; Fleury, Eduardo; Trzcinski, Kajetan
A consumption tax reform in Brazil has been recently approved by the House of Representatives, providing a full tax exemption for the yet undefined ‘National Basic Basket’ of goods (cesta basica nacional), alongside a cashback scheme that is yet to be determined. This note simulates the distributional impacts of different fiscally neutral scenarios of reduced rates and exemptions. The authors show that the exemption of taxes for food and personal care goods (such as those suggested by Law 10,925) would benefit the most vulnerable. Nonetheless, overall expenditures on certain items that are being considered for inclusion in the cesta are relatively concentrated on households in the top decile of the income distribution. Thus, a blanket exemption on Cesta Basica items may benefit the richest more in absolute terms. If the list of items in the exempted Cesta Basica is shortened and the equivalent resources of the potential forgone revenues are returned into a targeted cashback scheme, a far less regressive indirect tax system could be achieved.
Brazil – COVID-19 in Latin America and Caribbean: 2021 High Frequency Phone Surveys - Results Phase Two, Wave One
(Washington, DC, 2022-04) World Bank
Brazil has been one of the countries most affected by the COVID-19 pandemic in the region. In June 2021, it was the country with the second-highest rate of deaths per million and the fourth by the number of cases per million in Latin America and the Caribbean. The effects of the health crisis were broad and still evident a year and a half into the pandemic. In line with pre-existing vulnerability profiles, the pandemic affected the Brazilian population differently in the labor market. At the time of the survey, the proportion of people who lost their pre-pandemic job and were not working was 29.1 percent. This proportion was highest among the elderly (57.8 percent), those with primary education or less (42.7 percent), women (41.4 percent) and rural workers (38.7 percent). About 58 percent of those who lost their jobs became inactive, and most of the new inactive were women (68.9 percent). Simultaneously, 29.2 percent of the previously inactive entered the labor force during the pandemic, though one-quarter of them were unemployed in mid-2021. Women represented a majority among the new active (64.3 percent). Finally, the pandemic resulted in higher informality rates among those who remained employed.
Brasil – COVID-19 na América Latina e Caribe: Pesquisas por Telefone de Alta Frequência 2021 - Fase Duas : Coleta Uma
(Washington, DC: World Bank, 2022-03-31) Lara Ibarra, Gabriel; Katyna Argueta
Brazil has been one of the countries most affected by the COVID-19 pandemic in the region. In June 2021, it was the country with the second-highest rate of deaths per million and the fourth by the number of cases per million in Latin America and the Caribbean. The effects of the health crisis were broad and still evident a year and a half into the pandemic. In line with pre-existing vulnerability profiles, the pandemic affected the Brazilian population differently in the labor market. At the time of the survey, the proportion of people who lost their pre-pandemic job and were not working was 29.1 percent. This proportion was highest among the elderly (57.8 percent), those with primary education or less (42.7 percent), women (41.4 percent) and rural workers (38.7 percent). About 58 percent of those who lost their jobs became inactive, and most of the new inactive were women (68.9 percent). Simultaneously, 29.2 percent of the previously inactive entered the labor force during the pandemic, though one-quarter of them were unemployed in mid-2021. Women represented a majority among the new active (64.3 percent). Finally, the pandemic resulted in higher informality rates among those who remained employed.