Ultra-processed foods will be excluded from the Selective Tax

Created to tax products that are harmful to health and the environment, the Selective Tax will save ultra-processed foods. The exclusion of this type of product is provided for in the complementary bill that regulates the consumption tax reform, sent this Wednesday (24) evening to Congress.

The text excluded ultra-processed foods from the so-called “Sin Tax”, despite a recommendation from the Ministry of Health and civil society entities to charge the extra tax. Sugary drinks, however, will have an impact. Stuffed cookies, snacks, cereal bars, instant noodles, packaged soups and ice cream are examples of the products.

In addition to sugary drinks, the Selective Tax will apply to the following items: oil, natural gas and iron ore; and polluting vehicles, aircraft and vessels. In the case of cigarettes and alcoholic beverages, the Selective Tax will replace the high IPI rates that currently apply to these products as a public health policy.

Check the details of the Selective Tax:

Alcoholic beverages

• Selective Tax Rate proportional to alcohol content. Drinks with higher content pay more taxes;

• Gradual taxation follows recommendations from the World Health Organization, the Organization for Economic Cooperation and Development and the World Bank;

• Proportionality opposes the beer industry, which defends different rates, and distilled beverage producers, who ask for equal rates for all alcoholic beverages.

Cigarettes

• Rate proportional to the nicotine and tar content, as is currently the case.

Vehicles, aircraft and vessels

• Selective Tax will be levied proportionally to the degree of pollution and lack of innovative technologies;

• In total, six criteria will be applied to define the rate:

– power;

– energy efficiency;

– structural performance and assertive management technologies;

– proportion of recyclable materials;

– carbon footprint (carbon dioxide emissions);

– technological density (degree of innovative technologies).

• Cars considered sustainable will have a zero rate of Selective Tax, based on the following items:

– carbon footprint;

– proportion of recyclable materials in the vehicle;

– vehicle category;

– component production and assembly index in the country.

• Criteria are in line with the Green Mobility Program (Mover) and the Ecological Transformation Plan;

• Zero rate of Selective Tax for taxis and vehicles sold to people with disabilities, but the benefit needs to be recognized and regulated in the Goods and Services Tax

Oil, iron ore and natural gas

• Tax rate of up to 1% on the market value of oil, natural gas and iron ore extracted;

• Selective Tax will also apply to exports;

• Ordinary law will establish exact rates for each type of product;

• Zero rate for other minerals, including strategic minerals that will be used for the energy transition in the Ecological Transformation Plan;

• Zero rate for natural gas used as an input by industry;

• The impact on exports can be questioned in court, because one of the pillars of the reform is the non-exportation of taxes.

Ultra-processed

Despite the justification of preserving health, the government excluded ultra-processed foods from the Selective Tax, which will apply to foods considered harmful to health. Only drinks with added sugar and preservatives will be subject to the tax.

In March, a manifesto signed by doctors such as Drauzio Varella and Daniel Becker, as well as personalities such as chefs Bela Gil and Rita Lobo, called for the inclusion of ultra-processed products in the Selective Tax. Entitled “Manifesto for a healthy tax reform”, the text was supported by organizations such as the Brazilian Nutrition Association (Asbran), the Brazilian Public Health Association (Abrasco) and the Brazilian Institute for Consumer Protection (Idec).