Government will tax drinks based on alcohol content; ‘sin tax’ will be higher on vodka than on beer | Economy

The government will tax drinks for volume and alcohol contentwith the “sin tax” rates that will be greater about vodka than beerfor example.

The rates will be defined until 2026, with entry into force from 2027. The information was given by the Ministry of Finance, this Thursday (25), during a press conference that lasted more than seven hours.

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According to the regulatory proposal sent to the National Congress, alcoholic beverages will be taxed by two taxes, the rates of which have yet to be defined:

• percentage rate by volume;
• specific rate on alcohol content.

That is, a liter of vodka with an alcohol content of 50% will be taxed more than a liter of beer with an alcohol content of 5%. This is because of the alcohol content in the drinkeven though they both have the same volume.

“If I drink 1 liter of beer and 100 ml of whiskey, I am drinking the same amount of alcohol. And this taxation of that quantity is one. The value of what the rate will be will be defined in ordinary law”, said the extraordinary secretary for tax reform at the Ministry of Finance, Bernard Appy.

However, according to IRS tax auditor Pablo Moreira, the tax burden should not increase with the reform.

In other words, drinks taxed by current taxes would have a reduction with the uniform rates provided for by the tax reform. The “sin tax” would raise these taxes to match the current tax burden.

According to Moreira, today, these products already pay above-average ICMS and PIS/Cofins rates. Therefore, the tax burden should not increase.

The “sin tax” will be charged on cigarettes, alcoholic beverages, sugary drinks, polluting vehicles and the extraction of iron ore, oil and natural gas.

The proposal is included in the draft regulation of tax reform on consumption, sent to Congress this Wednesday (24).