Ministry of Finance estimates consumption tax rate of 26.5%, one of the highest in the world | Economy

The extraordinary secretary of the Ministry of Finance for tax reform, Bernard Appy, estimated this Wednesday (24) that the average rate of taxes on consumption in the tax reform is 26.5%.

“The estimate is very close to what was before. With the design, from 25.7% to 27.3%, with an average of 26.5%. The reference is the average, but the expectation is that it will be even lower” , declared Appy, in the Chamber of Deputies.

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The minister claims that, currently, taxes charged on consumption in the country are even higher, at around 34% – there is difficulty in calculating taxes because they are embedded in the prices of products.

This is just an estimate of the future tax rate. The final value of the final tax rate It will only be known in the coming years – after a period of testing has been carried out to “calibrate” the value – necessary to maintain the current tax burden.

Tax reform: 25% tax on consumption would be one of the highest in the world

According to information from the Tax Foundation, more than 170 countries adopt the VAT collection model, including all European countries.

• The average VAT in the countries of the Organization for Economic Cooperation and Development (OECD), the so-called “rich club”, is 19%;
• The European Union’s average standard rate is 21%, six percentage points above the minimum VAT rate required by the region’s regulations;
• Japan has a 10% value-added tax;
• Hungary has the highest VAT in the world at 27%;
• Croatia, Denmark and Sweden have a 25% consumption tax;
• Luxembourg has a rate of 16%, Malta 18% and Germany 19%.

The only major economy in the world without VAT is the United States. In the country, each state has its own sales regime, instead of a federal tax. The average consumption tax in the USA, however, is low: 7.4%.

In the PEC approved last year, important points, such as the end of cumulative taxes, the collection of taxes at destination, simplification and the end of distortions in the economy (such as the transfer of invoices and the tax charged “inside”) have already been ensured .

How Tax Reform will simplify price definition

However, several sensitive topics were postponed until 2024, as the text of the PEC indicates the need to regulate some matters through bills. This is what the government began sending to the Legislature this week.

In this first regulatory project, delivered this Wednesday, the The government brought proposals for the basic food basket, for “cashback” — the return of taxes for the low-income population — and for the selective tax, among other topics.

The document, however, has not yet been made public.