Brazil charges more than triple the consumption taxes than the USA

The tax reform recently approved in the Senate will keep Brazil with the highest consumption tax burden in the world – the standard rate must be at least 70% higher than the world average.

In addition to the number of exemptions and tax exemptions that are already in force in the current model, the country’s leadership in this ranking is also a result of the composition of the system, in which the taxation of goods and services weighs much more than the State’s collection of income. and heritage.

The total taxes collected in Brazil in 2021 corresponded to 33.5% of GDP, a rate slightly lower than the average for countries in the Organization for Economic Cooperation and Development (OECD), which was 34.1%.

Brazilian taxes on consumption, however, represented almost half of the amount (15% of GDP), while among OECD members they were equivalent to less than a third (10.6% of GDP). In the United States, the tax burden on goods and services was 4.4% of GDP in the same year. The Brazilian one, therefore, is more than triple the North American one.

Income taxation, in turn, was equivalent to 8% of GDP in Brazil and 12.8% in the United States. Among the countries in the “rich club”, the average was 11.3%.

For the president of the Brazilian Institute of Planning and Taxation (IBPT), João Eloi Olenike, the country could advance further if a broader tax reform was carried out, which also included taxes on income and assets, in order to align the Brazilian system with practices of more developed countries. “It’s a simple thing: taxing according to the citizen’s effective ability to pay,” he says.