If the debate is limited to Congress alone, the tendency is for powerful lobbies to win the dispute
Last Wednesday (24), the National Congress received the text of the first proposal of the bill that regulates the Consumption Tax Reform. Approved and promulgated in December 2023 in the Chamber, the text amended the Federal Constitution to unify and simplify a series of taxes and charge more for some products that cause harm to health and the environment, such as cars and pesticides.
The podcast Three by Four This week he invited the doctor in political science and Advocacy coordinator at ACT Promoção da Saúde, Marcello Baird, to comment on the reform regulations. This week, José Genoino, former president of the PT and regular commentator on the program, shares the bench with journalists Nara Lacerda and Nicolau Soares, from Brazil in fact.
According to Baird, the new tax rule has the potential to strengthen the market, boost the economy and benefit not only the population in general, but also industries and companies.
“We are simplifying the system, especially for the private sector. It will be much easier to do business and comply with tax obligations, as there will be a VAT, a single payment, instead of having to pay several taxes.”
Faced with expectations of the delivery of bills regulating the text of the tax reform, the main producers of ultra-processed products, beverages, tobacco, cigarettes and pesticides in Brazil formed a lobby to make the Selective Tax unfeasible, which aims to tax products that threaten health, the well-being of the population and the environment.
As Marcello highlights, “they came together to form Uncab [União Nacional da Cadeia Produtiva de Alimentos e Bebidas] and are behind these proposals in Congress, anticipating the Executive. They have united more than twenty parliamentary fronts to do this, and they are campaigning, buying space in the media. It’s been a while since I’ve seen such a strong industry coalition like this one in food right now,” he said.
In this context, José Genoino warns of the need for the government to develop a concrete agenda on what it intends to do with the Selective Tax, and to hold this debate not only in parliament, but also in social organizations and popular movements. “If [o debate] If they are stuck only with the National Congress, the tendency is that these powerful lobbies will win this fight”.
Genoino also points out that the reform “is an advance in the rational modernization of the tax system”. However, he remembers that these changes are not the path to structural transformation of the system. “We are discussing an improvement. This is the fundamental thing in the consumption tax dispute.”
Not only tax reform, but also health promotion
The measures proposed by the economic team range from the equalization of taxes in the economic field to the improvement and strengthening of policies in the context of social health, aiming to provide better living conditions for the population.
Given the guidelines outlined in the reform document presented by the Minister of Finance, Fernando Haddad, Marcello highlights the importance of the proposed tax exemption for natural foods, which has a significant impact on the availability of these products on the shelves and the composition of basic food baskets.
“An ideal tax reform is one that aligns Brazil with sustainable development objectives. This [reforma] consumption needs to encourage what is good for health and the environment, and discourage what is bad for health in the environment”, highlights Baird.
The government has stipulated 18 categories of products, already included in the traditional basic food basket model, which will be completely exempt from IBS and CBS. In this way, foods such as rice, beans, coconut, and other grains, commonly present on the Brazilian plate, will have a guaranteed presence on the plate and in the pantry of the low-income population.
Marcello highlights the gain in quality of life that the exemption of healthy foods in the basic food basket can provide. “It’s the best way for us to solve the two food problems we have. Firstly, the fight against chronic diseases, such as obesity, and on the other hand, the fight against hunger.”
Marcello believes that combating ultra-processed foods goes beyond mere revenue collection. “It is, first of all, about establishing means that ensure that all social layers are encouraged and facilitated to adopt a healthy consumption pattern, promoting quality of life regardless of socioeconomic status or capital accumulation.”
In the proposal sent to Congress, however, Haddad’s team did not carry out the idea of taxing ultra-processed food products.
In turn, José Genoino solidifies the idea that the reform proposal needs to be thought of in a broad way, not only determining selective pricing on certain products, but also balancing taxes on consumption based on adjustments in relation to large fortunes.
“It is correct to reduce the consumption tax that affects the entire population and increase the tax on income, assets and capital. Because consumption affects everyone. This way you benefit the population as a whole. To alleviate and guarantee the State’s social investments, you have to increase taxes on income, assets and capital, reiterates Genoino.
Equivalence of taxes to wealth
In addition to the exemption on food and national processing items, the guests of the Three By Four highlight the importance of a balance between tax rates according to the level of accumulated wealth. “This implies charging more from those with greater economic power and proportionally less from the neediest classes”, explains Genoino.
For Marcello, the taxation of wealth would act to collect more taxes in order to, mainly, reduce the taxes that affect consumer goods, thus enabling an improvement in the national economy.
Considering the more developed countries compared to Brazil’s current tax regime, Genoino reinforces the need to mitigate inequality in the national territory.
“You see news about the income tax rate in some countries, Brazil’s is very low. […] Those who have more pay more. In the case of Income Tax, it would be an additional rate, and without worsening the rates of those below, even easing the rates of the popular classes.”
New episodes of Three by Four are released every Friday morning, discussing the main events and the political situation in the country and the world.
Editing: Thalita Pires
