On Wednesday (10), the Chamber of Deputies approved a bill to regulate the Tax Reform on consumption. It established rules and exceptions to food taxation in Brazil, including products from the basic-needs grocery package, meat and even soft drinks.
The reform seeks to standardize and simplify tax collection on everything that can be bought or hired in Brazil. From cars to fridges, from the dentist to the architect, in principle, everyone would be taxed at the same rate: 26.5%, according to preliminary calculations by the federal government.
Standardized taxation, however, could make essential products and services more expensive, while, at the same time, cheapening those whose consumption should be inhibited. For this reason, exceptional tax regimes were created, which affect food.
Marcello Fragano Baird, monitoring coordinator of public policy for the Brazilian organization ACT Promoção da Saúde, followed the Chamber of Deputies’ vote last night. He told Brasil de Fato that, in general, the reform's rules and exceptions are positive.
"The reform is a step forward for Brazil. The country is better off in terms of the right to adequate and healthy food," he said.
Basic-needs grocery package
Baird pointed out that the reform zeroed taxes on basic-needs grocery packages, which tends to make them cheaper. Today, on average, these products are taxed at around 8%.
He also pointed out that the regulations set out an important guideline for what must be in the packages. The set of essential items for subsistence must include only healthy and minimally processed foods.
"This was a very important victory. The foods in the basic-needs grocery package should really be the basis of an adequate diet," said Nayara Côrtes Rocha, secretary-general of the Organization for the Human Right to Adequate Food and Nutrition.
Under the bill recently approved by federal deputies, the exemption for the basic-needs grocery package:
. Rice
. Milk
. Butter
. Margarine
. Beans
. Roots and tubers
. Coconuts
. Coffee
. Soybean and babassu oil
. Cassava flour
. Corn flour
. Wheat flour
. Sugar
. Pasta
. Bread
. Corn oil
. Oats
. Cheese
. Salt
. Vegetables
. Fruits
. Eggs
. Meat
. Fish (except cod, tuna and salmon)
Meat
The inclusion of meat as part of basic-needs grocery packages was the subject of intense debate until the approval of the reform regulations.
The government did not propose a total exemption for meat. The tax discount, however, was established after the rural caucus put pressure. "Agribusiness managed to get everything it wanted," Baird added.
Economist David Deccache, who holds a PhD from the University of Brasilia (UnB, in Portuguese), questioned this exemption. Firstly, because it benefits the richest, precisely the group of people who consume the most of the product. Secondly, the exemption ends up becoming an incentive for cattle farmers.
"Part of the tax discount ends up becoming a profit margin for producers," he said, during his interview with Central do Brasil, produced by Brasil de Fato.
"We could have discussed this more carefully," Baird said. "Beef presents a concern for the environment. Brazil's contribution to global warming lies in meat production."
Baird and Deccache also said that the exemption for meat and other products will have to be compensated for with tax revenue from other items. The two researchers believe that the standard rate of 26.5% provided for in the reform will end up being raised.
Ultra-processed foods
This compensation can also be made by extra taxing certain products. The Tax Reform created the so-called selective tax. It establishes an extraordinary tax rate levied on items that are bad for health or the environment.
Baird, from ACT, said that nutrition experts advocated including so-called ultra-processed foods on the list of surcharged products, as well as alcoholic drinks and cigarettes. According to research by the Center for Epidemiological Research in Nutrition and Health at the University of São Paulo (Nupens/USP, in Portuguese), consuming these products causes diseases that kill 57,000 people every year in Brazil. Despite this scenario, ultra-processed foods were left out of the surcharge.
According to Baird, the only ultra-processed food included on the list of items to be overcharged was soft drinks. He points out that soft drink producers tried in many ways to overturn the inclusion, but it was eventually confirmed.
"The industry lobby was very strong, but it was a victory," he said. "We signaled that unhealthy food needs to be discouraged, albeit timidly."
"Soft drinks are associated with chronic non-communicable diseases. The price issue is an important factor in their consumption," added Nayara, from Fian, who also celebrated the extra taxation on soft drinks.
Senate
Nayara and Baird said there is still a chance that more ultra-processed foods will be subject to selective taxation. This is because the reform regulation will still have to be debated and voted on in the Senate before it becomes law.
On Thursday (11), party leaders advocated removing the urgency of the bill so that it could be debated more accurately.
The Tax Reform will only come into force on tax collection in Brazil from 2032 on. Until then, a transition period is planned.
Edited by: Rodrigo Chagas
