Brazil is considering a strategic approach to taxation that could enhance public health and government revenue, according to a new policy note from the World Bank. The focus is on taxing tobacco, alcohol, and sugary drinks to reduce mortality rates.
The country's ongoing tax reform, made possible by Constitutional Amendment 132, offers a chance to implement these changes. This involves the Selective Tax in the Complementary Law currently under Senate discussion and an Ordinary Law expected in Congress by 2025.
Statistics show that around 341,000 deaths annually in Brazil—20% of all deaths—are linked to tobacco, alcohol, and sugar-sweetened beverages. These substances contribute significantly to cardiovascular disease, cancer, diabetes, and chronic pulmonary diseases. Excise taxes on these products have been effective in reducing consumption and preventing related deaths.
The World Bank's document highlights that prices for tobacco products, alcoholic beverages, and sugary drinks are relatively low in Brazil compared to similar countries in Latin America and the Caribbean (LAC) region and G20 nations. These affordable prices lead to high consumption rates. The recommendations aim to help Brazil achieve notable public health improvements alongside increased tax revenues.
Reducing consumption of these products is expected to decrease preventable deaths and diseases significantly. Despite reduced consumption levels, higher tax revenues can still be achieved.
Low-income families stand to gain the most from this policy change. They are more responsive to price increases; thus, a significant rise due to well-designed health taxes will likely reduce their consumption of harmful products. Currently, most deaths from these causes occur among low-income households. Consequently, most health benefits—including fewer deaths and diseases—will benefit these groups.
Brazil has a critical opportunity to improve its public health outcomes through strategic taxation measures that could save lives and boost productivity.