Regressive tax systems in unequal societies: the case of Brazil

• Grant number: 19/22469-7
• Support Opportunities: Scholarships abroad - Research Internship - Doctorate
• Start date: January 13, 2020
• End date: June 09, 2020
• Field of knowledge: Humanities - Political Science - Public Policies
• Principal Investigator: Marta Teresa da Silva Arretche
• Grantee: Eduardo Alves Lazzari
• Supervisor: Maria Candelaria Garay
• Host Institution: Centro Brasileiro de Análise e Planejamento (CEBRAP). São Paulo , SP, Brazil
• Institution abroad: Harvard University, United States
• Associated to the scholarship: 17/24614-9 - Brazilian fiscal structure: redistributive expenditures and regressive revenues, BP.DR

Abstract

Why Brazil has a regressive tax system at the same time its expenditure policies are progressive and redistributive? The question is particularly troublesome considering that Brazil, despite being able to recently reduce its income inequality through in-kind services and conditional cash transfers, remains as one of the most unequal countries in the world. By analyzing a significant and brief progressive change in its tax system, the CPMF, a social contribution that was mainly incident on rich strata and earmarked its revenue to the public health system, we argue that its enactment was seen as beneficial by its proponents regarding its revenue potential and its return to the health system. Therefore, the Brazilian case highlights the fiscal constraints and the electoral competition for unaligned voters that explain the institution of progressive tax changes, contributing to a theory that shows how tax policy follows a different dynamic if compared to expenditure policies. Therefore, this project is able to increase our understanding in tax policy, from a comparative perspective, considering what has been produced in Political Science, according to a theory that has never been applied to the Brazilian case, broadening its scope. (AU)