Sin tax: government wants to maintain tax burden on drinks and cigarettes for the duration of the transition period

The Minister of Finance, Dario Durigan, stated this Friday (19) that there is no intention of postponing the implementation of the so-called selective tax, known as the "sin tax", scheduled to begin in 2027.
He added that the idea is to maintain the current tax burden (weight of taxes) that currently exists, that is, without an increase, in a transition process, in which a debate will be held with the affected sectors.
"The idea is to make an agreement with the affected sectors, maintaining the tax burden that they currently have in the IPI, so that the transition can be made, with improved debate afterwards. The proposal must be forwarded this year", said Durigan, in an interview with Jota.
Earlier this month, the Ministry of Finance informed g1, however, that the objective is to make products or activities that cause harm to health or the environment more expensive in the future as a way of reducing their consumption.
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The list includes alcoholic drinks, soft drinks and cigarettes. The new tax will also apply to some vehicles, depending on the level of pollution, on the extraction of mineral goods, and on lotteries, betting and "fantasy sports" games, which are online games where participants form virtual teams with real athletes and compete based on the performance of these athletes in real matches.
To effectively start taking effect, the National Congress needs to approve the tax regulations, but the federal government's proposal has not yet been sent. The Executive says this will be done by the end of this year.
➡Survey by Fiocruz, cited by the Ministry of Health, says that, in 2019, alcohol consumption cost R$ 18.8 billion, of which R$ 1.1 billion related to direct federal costs with hospitalizations and outpatient procedures in the SUS, and R$ 17.7 billion to lost productivity due to premature mortality, leaves of absence and early retirement resulting from diseases associated with consumption of alcohol, loss of working days due to hospital admission and social security sick leave.
➡In Brazil, according to the Ministry of Health, diseases related to smoking generate an indirect cost of R$86.3 billion per year, which results in a total annual expenditure of R$153.5 billion for the government, equivalent to 1.6% of GDP. "On the other hand, the collection of federal taxes on the sale of cigarettes is only R$8 billion per year, which highlights an imbalance between health spending and the revenue generated by the sale of the product", he says.
➡Considering ultra-processed drinks, such as soft drinks, isotonic drinks and soft drinks, the government estimated, in a study to support the use of the selective tax, that the costs accounted for by the Unified Health System (SUS) with the treatment of diseases associated with the consumption of these products are estimated at almost R$ 3 billion per year.
➡National producers say that alcoholic beverages, for example, are already highly taxed in Brazil, with a tax burden ranging from 40% to more than 80% of the price of the product, and they assess that a possible increase in taxes charged will put pressure on profit margins, potentially generating transfers to prices, layoffs and encouraging the illegal market.
Seal imposed on the sin
Reproduction/GloboNews

Source: G1