São Paulo Leads Brazil’s Economic Freedom Rankings As Tax Burden Weighs On Lagging States

Brazil’s states are moving—slowly—toward a friendlier climate for business, but the gap between leaders and laggards is striking.

A new 2023 scorecard of economic freedom puts the national average at 5.10 on a 0–10 scale, the best in three years yet still below the pre-pandemic high. São Paulo sits at the top with 6.26, followed by Goiás (6.12), Espírito Santo (6.09), Rio de Janeiro (6.05), and Pará (5.66).

At the other end, Tocantins (3.96), Roraima (4.11), Acre (4.21), Mato Grosso (4.35), and Amazonas (4.37) remain stuck with heavier costs and slower approvals.

What the index actually measures is simple and practical: how large the state is relative to the private sector (spending), how much it takes (taxation), and how tightly it controls hiring and pay (labor regulation).

Taxation is the consistent weak spot nationwide, a reminder that layered levies and compliance hurdles still drain time and cash.

For context, Brazil’s freedom score plunged during the 2020 pandemic to 4.06, then climbed—but not yet back to the 2018 peak of 7.66.

São Paulo wins on rules and growth

The story behind the story is about incentives. São Paulo’s edge isn’t magic; it reflects scale, deeper supply chains, and more predictable rules that help firms hire, expand, and export. States near the top tend to keep a lighter touch and clearer processes.

Those at the bottom carry higher effective burdens and more rigid labor setups, pushing entrepreneurs into informality or across state lines.

There is also a policy turn underway. Brazil is mid-stream in a tax overhaul that will replace a patchwork of consumption taxes with a dual VAT.

If implementation cuts red tape and removes cascading taxes, states that already value predictability could become even more attractive to manufacturers, logistics operators, and service exporters.

Those that streamline spending and modernize labor practices have a chance to catch up; those that do not risk falling further behind.

Why expats and foreign investors should care: these scores translate directly into time-to-permit, payroll flexibility, after-tax margins, and ultimately job creation.

For anyone choosing where to base a team or allocate capital, the map of Brazilian economic freedom is not theory—it’s a practical guide to where growth is easiest and execution is fastest.