Proposal to regulate tax reform includes tax increases on cars, alcoholic and sugary drinks, as well as extracted mineral goods

As reported by the website O Tempo, the Brazilian Government is predicting a new tax reform in several segments, including the automotive sector, where the value of tax on vehicles, alcoholic and sugary drinks and minerals will be significantly increased. O tax increase of these products, the “Selective Tax”, aims to tax products which are considered harmful to health and also the environment, as is the case with conventional vehicles. Understand the measures better;

How will the car tax work?

The Government's Selective Tax collection will cover light commercial vehicles and automobiles and diverse vehicle characteristics will be taken into account when calculating the tax rate. Such parameters considered will be:

• Energy efficiency;
• Power;
• Technology;
• Performance;

Regarding sustainable vehicles, no taxes will be charged, i.e. ZERO rate for these vehicles. On the other hand, “non-sustainable” cars will have their increased taxes.

Find out more about the new tax reform

Selective Tax also on drinks

The Government's new proposal also covers the liquor and sugary drinks and the central argument for the tax increase is stimulate the decrease consumption of these products by the population as they increase the risk of diabetes and obesity.

The basis of increase in this taxation This is in line with what the WHO declares, as the Organization informs that increasing the tax is an 'efficient' way of reducing the consumption of these drinks by the population. 83 countries have already adopted taxation on alcoholic and sugary drinks (especially soft drinks) to encourage decreased consumption.

Other products that will be “hit”

Other products such as smoke, iron ore, natural gas and also the oil will be 'hit' with this new tax increase proposal. Regarding tobacco, Brazil already has taxes on cigarettes and new proposal provides for the inclusion of artisanal cigarettes, cigarillos and cigars.

Speaking of oil, iron ore and natural gas, the taxes charged will follow the MAXIMUM percentage of 1% to the company responsible for extraction. The government's new proposal also plans reduce the tax rate zero for natural gas that is used as an input in industrial and similar processes, in addition to “not charging” taxes on collective public transport services for road and subway passengers of an urban, semi-urban and metropolitan nature.

All of these measures proposed by the Government aim to increase sustainable practices among the population and reduce the consumption of products that are harmful to health.