RIO DE JANEIRO, BRAZIL – Brazilians had to work until Saturday, May 30th, the 151st day of the year, to pay taxes for 2020. This is shown in a study by the Brazilian Institute of Planning and Taxation (IBPT).
The 151-day figure is slightly lower than in 2019, when 153 days were required to this end. It is the first drop since 2009 when taxpayers worked 147 days to pay taxes.
To conduct the study, the IBPT computes earnings and payments made between May 2019 and April 2020. Thus, the coronavirus pandemic and the reduction in economic activity had a slight impact on the result.
“Within this calculation, we took a pre-pandemic period. But there is already a reflection. This part of the pandemic will have an impact on next year’s calculations,” explains João Eloi Olenike, the IBPT’s executive director and one of its study leaders.
Since the Brazilian tax burden has a greater weight on consumption, in comparison with assets and income, the projection for 2021 is that the number of days worked to pay taxes will be even lower. This is due to the fact that many states have decreed quarantine and even lockdown as a measure to tackle Covid-19.
Approximately 41.25 percent of all Brazilians’ annual earnings have gone to the federal, state, and municipal government coffers. The figure is slightly lower than in 2019, 41.80 percent, and is only higher than in 2013 when taxes were responsible for 41.10 percent of revenues.
Those earning less pay more
For this study, the Institute’s calculations were based on three income brackets: up to R$3,000 (US$562.20 – classified as low income); from R$3,000 to R$10,000 (middle income); and above R$10,000 (upper income). In the proportional comparison, the middle class pays more taxes, around 43.9 percent, while the low-income class pays 39 percent and the upper class pays 42 percent.
“Consumption is our main source of revenue. Those with R$15,000 income consume the same product as those earning R$3,000. Proportionally, the incidence is higher for those earning less,” explains Tathiane Piscitelli, professor of the Getúlio Vargas Foundation (FGV) Professional Master’s Degree in Tax Law and president of the OAB/SP Special Committee on Tax Law.
Source: Exame