Opinion

The devils of Brazil’s tax reform proposal

Deemed insufficient, unclear, and filled with political uncertainty, Brazil's tax reform proposal seems set to sink without a trace

The devils of Brazil’s tax reform proposal
Economy Minister Paulo Guedes and President Jair Bolsonaro. Photo: Fábio Rodrigues Pozzebom/ABr

Finding ways to improve Brazil’s tax code is not hard. The system is exceedingly complex — in 2014, one tax lawyer concluded a 23-year project to compile all the country’s tax laws into a single book, handing in a colossal 41,000-page tome weighing 7.5 metric tons. It is notoriously regressive, overtaxing consumption and under-taxing income. The top income tax rate for individuals stands at 27.5 percent, but the actual tax paid by Brazil’s richest is much lower, thanks to several loopholes. 

It creates poor incentives to companies, inhibiting growth and creating a huge market for lobbying and litigation. Fairness,...

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