• Brazilian High Tax Rates and the Increase of Poverty

    By Gabriel Quintanilha

    20-05-2016

    By the 3rd of May, Brazilians have paid seven hundred billions reais (Brazilian currency) in taxes. This amount is really high, considering Brazil’s economic and political crisis.

    High tax rates are the wrong way to make a country grow because it discourages new jobs, savings and entrepreneurship. A significant amount of Brazilian tax payers is rearranging its businesses to pay less taxes and in this scenario, there is a big loss for the population, specially the poor, because they cannot get new jobs and the cost of living becomes unpayable.

    In Brazil, health, education, public security and social security are the government’s responsibility. The outcome is that as the economy decreases the government starts increasing taxes and the result may be tragic, because companies are closing and people are becoming poorer. The effect of high tax rates can be seen in the most important cities of Brazil, with the growth of violence, poverty, product discontinuation, foreclosures, evictions, homelessness and recession.

    It is undeniable that Brazil needs an urgent tax reform, because the reflections of the government’s wrong choices are making people poorer and the economy weaker.

    On the other hand, with the currency devaluation, foreign investors are coming to Brazil and it is necessary for them to make a good tax planning before bringing their money, at risk of bankruptcy.

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  • The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.

Gabriel Quintanilha

Gabriel Quintanilha is based in Rio de Janeiro. Gabriel has been an attorney at law since 2006. He is also Professor of Tax Law at Fundação Getulio Vargas – FGV and IBMEC. Author of books and articles published in Brazil.

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