10 Products with the Highest Taxes in Brazil
Brazil has one of the 30 highest tax burdens in the world, and some of the products sold in the country may have over 80% of its price determined by taxes. Check the list of 10 products with the highest taxes in this article.
According to the institute, out of those 30 countries with the highest tax burden, Brazil is the last one that offers good quality public services to the population. This conclusion was made considering the tax burden, provided by OCDE, the Organisation for Economic Co-operation and Development, and the Human Development Index provided by UNDP, the United Nations Program for Development. The latest data considered was from 2011, when Brazil had a tax burden of 36,02% and was only in the 86th position regarding the HDI.
IBPT also calculated that Brazilians work approximately 150 days, only to pay their taxes. This means that all money earned by a worker from January 1st to May 30th goes straight to the government’s account.
The list of products whose majority of cost also goes directly to the government is the following:
10 - Motorcycles
Even though people complain more about the prices of cars, motorcycles with over 250 cc have 64,65% of their prices composed of taxes. High taxes were imposed on motorcycles to protect the national market by the time these goods were being produced in Brazil; however, the taxation didn’t change as the years went by.
9 - National Perfumes
It is not only the international perfumes which are taxed highly in Brazil. From the prices of national perfumes, 69,13% is composed of taxes. This means that, for example, perfumes produced in the country that cost BRL 70 have BRL 48,30 of the amount reverted to the government.
8 - Guns
Guns have less taxes than video games in Brazil, as 71,58% of the total price of the firearms is composed of duties. Part of the money collected goes to FNSP or Fundo Nacional de Segurança Pública, the National Public Security Fund; however, the government justifies these high taxes on guns due to their direct involvement in criminality and violence in the cities.
7 - Video Games/Video Games Consoles
Both games and consoles tend to be very expensive in Brazil due to the taxes, that compose 72,18% of them. The duties levied are ICMS, PIS, and Cofins, and in case of imported products, these three plus the IPI.
Video games are also calculated according to the concept of the essentiality of the goods. However, IBPT’s president João Eloi points out that to consider a product essential or not is a very subjective concept, and that this charging system is old thus obsolete regarding some products.
By the end of 2013, when the Playstation 4 started to be sold in Brazilian stores, the price of the product, without taxes, would be something around BRL 858. With the taxation included, however, one Playstation 4 console costs approximately BRL 3,999. The official video games are usually bought for not less than BRL 100.
6 - Caipirinha
Caipirinha is described by a decree-law as the “typical Brazilian beverage, whose alcohol level varies from 15% to 36% in volume, at 20ºC, obtained exclusively with cachaça, lime, and sugar”. One of the most common drinks in Brazil, it has 76,66% of its price composed of taxes, 40% taken up by the IPI.
5 - International Perfumes
From the total price of imported products bought in the country, 78,43% are taxes. Without them, for instance, imported perfumes that cost BRL 274,55 would cost around BRL 59,22.
4 - Cigarettes
Taxes correspond to 80,42% of the price of cigarettes, as part of the government's attempt to decrease the consumption of the product in Brazil. The duty for this product used to be at 60% until 2011, when IPI became responsible for almost 45% out of the 80,42%, while PIS represents over 10%, and ICMS, 25%, on average.
3 - Vodka
IBPT showed that 81,52% of the price of vodka is composed of duties. Together with Scotch, cachaça, and wine, vodka's taxes were changed by the Federal Revenue Services in 2008, when the IPI cost of these products was increased by 30%. That was the first time the IPI of these alcoholic beverages was changed since 2003.
2 - Fur coats
Not a very common item in Brazil due to the high temperatures that most of the country tends to have during the year, the price of a fur coat is composed of 81,86% in taxes. This rate is high mostly because of IPI, which varies according to the essentiality of the good. Approximately, 70 minks are killed to produce one single fur coat, which costs at least BRL 2,000. In this example, the actual price of the coat would be something around BRL 300; the rest of the amount would be sent to the coffers of the government .
1 - Cachaça
Even though it's the most popular distilled alcoholic beverage in Brazil, cachaça has 81,87% of its price composed of the three taxes: PIS, Cofins, and IPI. The rates for handicraft producers are slightly higher than for industrial ones. Cachaça is the second most consumed alcoholic beverage in the country, next to beer.
The export of cachaça is highly encouraged by the government, and the product is part of the Programa Especial de Exportação, the special program for exporting, in which the IPI rate is zero. In the end, the country's own consumers are the ones who pay the bill.
Other alcoholic drinks also have over 50% of their prices composed of taxes: for Scotch, the rate is 61,22%; for beer, 55,6%; and for wine, 54,73%.