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News > Brazil

Rich Brazilians Pay 32 Percent Less Taxes Than G7 Rich People

  • Man checks his mobile phone as a woman riding a bike passes next to a Brazilian flag in Sao Paulo, Brazil June 28, 2018.

    Man checks his mobile phone as a woman riding a bike passes next to a Brazilian flag in Sao Paulo, Brazil June 28, 2018. | Photo: Reuters

Published 15 October 2019

In order to compensate for the low tax collection in the upper classes, the Brazilian State has chosen to get income through consumption taxes.

The audit firm UHY International published a study showing that high income Brazilians pay 32 percent less taxes than the average observed in Germany, Canada, the U.S., France, Italy, Japan and the United Kingdom, countries which are all part of the G7 group, the world's most industrialized economies.


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UHY highlights that a Brazilian citizen with an annual income of US$250,000 pays only US$68,600 in taxes, which corresponds to 27.5 percent of his or her income. In G7 countries, meanwhile, the average rate is 40.6 percent for those located in the same income segment.

Tax collection in G7 countries increases as the income of its citizens increase. In Brazil, however, such an  economic relationship does not take place because, for instance, a person who earns US$1.5 million pays the same tax rate as a person who earns US$250,000.

Stated differently, both citizens pay taxes for 27.5 percent of their annual income. If that Brazilian millionaire lived in a G7 country, he would pay taxes for 47.9 percent of his or her annual income.

“Brazil's tax policy is absolutely regressive. A person who earns more, pays less in taxes; and a person who earns less, pays taxes proportionately more," said the Workers' Party (PT) lawmaker Enio Verri, who is a member of the Congress Committee on Tax Reform.

"Here profits and dividends do not pay taxes... Motor vehicles, speedboats or even airplanes do not pay taxes."​​​​​​​

Additionally the UHY study shows that, due to its low capacity to collect income taxes from the upper class, the Brazilian state raises money by increasing consumption taxes, which is also a regressive policy because it affects all citizens regardless of their socioeconomic status.

In Brazil, public revenues from consumption taxes are equivalent to 35 percent of the Gross Domestic Product (GDP), which is one of the world's highest average figures. In 2016, such ratio even increased to 48 percent.

Meanwhile, the consumption taxes-GDP ratio was 33 percent in the Organization for Economic Cooperation and Development (OECD) countries and 18 percent in the United States in 2016.

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