Since the beginning of the year, Brazilians have already paid more than R$1.5 trillion in taxes to the federal government and their respective state and municipal governments. Continuing this trend, we will close the year with approximately R$1.5 trillion in taxes—or approximately R$1.7 billion paid, on average, by every Brazilian to maintain government structures and all related expenses. Given that Brazil's per capita GDP in 2014 is expected to be in the range of R$1.23 billion, this means that of all the wealth generated by each Brazilian citizen, approximately one-third will end up in public coffers.
In addition to all the possible criticisms about the misuse of these funds, the discrepancy between revenue collection and the well-being actually provided by the government to the population, and possible comparisons between the Brazilian tax burden and other developed and developing countries, I would like to draw attention here to two essential factors that demonstrate the unsustainable face of Brazilian tax policy: the tax regressiveness of the Brazilian system and the lack of incentives that enable the advancement of a green economy.
Regarding the first, there is a broad and long-standing debate. In short, the system is said to be regressive when the population with lower purchasing power pays proportionally more taxes than the wealthier. This is mainly due to the Brazilian tax model's heavy focus on consumption, not income. In other words, for the same good, a person earning one, ten, or one hundred minimum wages will pay exactly the same tax burden, overtaxing those with lower purchasing power to the detriment of others. In this sense, there is a direct correlation between the weight of consumption taxes and social inequality in countries around the world, reinforcing the idea that countries with predominantly income-based taxation tend to be less unequal than others.
Regarding tax incentives for the green economy, although we have experienced a surge of positive initiatives, it has recently been seen that the economic growth strategy prevails over a more sustainable development approach. Examples such as the ICMS (Tax on Goods and Services) exemption for non-conventional renewable energy generation equipment end up being overshadowed by the massive tax cuts imposed on the automotive industry, which were intended to revive its momentum. Reducing the tax burden to boost any industry is a long-standing strategy and is not questioned per se, but it was implemented precisely without any concern for the negative impact on urban mobility in large urban centers, in addition to the clear increase in local and global pollution.
Taxes, though frequently contested on all fronts, are a fundamental element for the functioning of any society. And precisely because of their necessity, they hold enormous potential to leverage sustainability as a national development strategy; or, as we have more frequently observed, they can further exacerbate inequalities and advances beyond the planet's natural limits.
