Poorest Brazilians Pay the Most Tax

By Jaylan Boyle, Contributing Reporter

RIO DE JANEIRO – A study recently completed by the Institute of Applied Economic Research has revealed that the poorest in Brazil are bearing substantially more of the country’s tax burden as proportionate to their income.

The report found that the Brazilian population as a whole worked an average of 132 days last year to meet their obligation to the government. When this average is further broken down it becomes clear that this burden is not shared equally among the country’s workers.

Those who earned up to two minimum wages per month, which would come to approximately US$930, spent 197 days over the course of the year in the service of the state. Conversely, those who received more than thirty times the minimum wage took only 106 days to cover their bill. This translates to a percentage of income spent on tax of 32.8% for the poorest 10% of the population, as compared with 22.7% for the richest 10%. The total tax burden for the Brazilian people came to 36.2% of Gross Domestic Product in 2008.

The Journal of the American Institute reports that the top 10% of the US population shoulder 68% of the country’s tax burden.

The IPEA has said that it believes there are great flaws in the Brazilian tax system, and believes the system is not fully meeting it’s obligation to ‘fairness’ and ‘ability to pay’.

“The same tax structure should not be imposed on people of lower economic ability – usually defined as those with lower income and lower net worth – as for citizens of greater economic capacity,” noted the IPEA report.

The IPEA report has identified welfare as one of the costliest segments of government spending when translated into work performed by the average Brazilian, consuming 24 days of labor per worker.

“Taxes are the most representative way in which the political system puts its ideals to work. Taxation is the way the political system puts in place its system of justice or injustice,” said Marcio Pochmann, President of the IPEA.

The study also details tax distribution discrepancies between ‘owners’ (those possessing assets such as a house, car or business), and non-owners, classified as those paying only income tax or making a contribution from pension or other benefit income. Respectively, these groups committed 13.6% and 24.4% of their income to tax payments in 2008.