Tax collection in Brazil has been increasing and Brazil’s tax take now rivals that of developed countries. However, research by both government and civil society shows that the poor pay substantially more of their income in taxes than the rich. It is estimated that very poor families – those earning only up to two minimum salaries a month – spend around 48.8 per cent of their income on taxes. Richer families – those earning more than 30 minimum salaries – are estimated to spend only 26.3 per cent of their income on taxes.
Brazil’s income tax is a key part of the problem.Tax concessions are common and the income tax burden on the richest has actually been reduced in the last decade. Various reforms have also brought in new tax breaks for companies. In 1995 the government passed a law reducing the rate of corporate tax from 25 per cent to 15 per cent as well as bringing in a number of exemptions from corporate income taxes. Brazilian civil society organisation (CSO) INESC has calculated that the amount of tax revenue foregone as a result of these generous tax concessions to businesses is around US$15.5 billion annually. In addition, the 5,000 richest families in Brazil own property worth an estimated 40 per cent of the country’s gross domestic product (GDP), yet property taxes continue to be neglected as a viable – and equitable – source of tax revenue. Progressive tax reform in Brazil is long overdue.