Tobacco, Beer, and Oil Companies Try to Avoid 'Sin Tax' in Brazil

Congress debates the regulation of the new tax

Brasília

Representatives from tobacco, alcoholic beverages, soft drinks, oil, and automobile companies are trying to persuade Congress to exclude their products from the Selective Tax, created by tax reform to be applied to items harmful to health or the environment. The House of Representatives is currently debating which products and services will be subject to the new tax, also known as the "sin tax"—a decision that could have significant long-term impacts on the chosen sectors. In a hearing this Monday (24), companies presented arguments to convince lawmakers. The starting point of the discussion is a bill sent by the Ministry of Finance to regulate the tax, created by the constitutional amendment of the tax reform—promulgated at the end of 2023. Nelson Leitão Paes, an advisor to the Extraordinary Secretariat of Tax Reform at the Ministry of Finance, opened the public hearing and said that some of the items to be taxed are currently provided for in the Constitution—such as extracted mineral goods.

The OECD (Organisation for Economic Co-operation and Development) includes, according to the secretary, countries that tax vehicles and those that tax fuel. "But vehicles seem more suitable for the tax," he said. Luiz Carlos Moraes, vice president of Anfavea (National Association of Motor Vehicle Manufacturers), countered the Finance Ministry's presentation. In his view, the tax increase will make these products more expensive, causing the Brazilian fleet to age, pollute more, and lead to more accidents.

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