Brazil: Tax Expenditure Rationalization within Broader Tax Reform

46 Pages Posted: 4 Feb 2022

See all articles by Maria Coelho

Maria Coelho

International Monetary Fund (IMF)

Date Written: September 1, 2021

Abstract

The excessive complexity and burden of the Brazilian tax system, riddled by cumulative indirect taxes and heavy payroll contributions, have led to an accumulation of fiscal incentives aimed at reducing its burden on taxpayers and productive activities. Federal and subnational tax expenditures currently stand at over 5 percent of GDP. Rationalizing them can only be comprehensively feasible in the context of a broader sequenced tax reform, and could reduce resource misallocation and income inequality, as well as provide new revenues.

Keywords: rationalization experience, Labor tax wedge, sequenced tax reform, cost of capital, zero rating, tax relief, single tax, Tax expenditures, Corporate income tax, Tax incentives, Personal income tax, Social security contributions, Global

JEL Classification: H20, H24, H25, H71, K34, H27

Suggested Citation

Coelho, Maria, Brazil: Tax Expenditure Rationalization within Broader Tax Reform (September 1, 2021). IMF Working Paper No. 2021/240, Available at SSRN: https://ssrn.com/abstract=4026443

Maria Coelho (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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