IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/9891.html
   My bibliography  Save this paper

Indirect Tax Incidence in Brazil : Assessing the Distributional Effects of Potential Tax Reforms

Author

Listed:
  • Lara Ibarra,Gabriel
  • Rubião,Rafael Macedo
  • Simoes Fleury,Eduardo

Abstract

Using recent expenditure survey data, this paper investigates the incidence of all indirect taxesin Brazil. It applies a novel approach to estimate the effective tax rate by computing the specific cumulativetaxes levied on thousands of items available in the data set. The findings show that for every R$100 of indirect taxrevenue, the first and second deciles pay R$2 and R$3, respectively, while the ninth and tenth deciles pay R$16 andR$33, respectively. Meanwhile, indirect taxes represent between 23 and 45 percent of income among the pooresthouseholds. Simulations of a value-added tax reform suggest that it could be inequality reducing both horizontally andvertically. A flat value-added tax accompanied by excise taxes on fuel items, alcohol, and tobacco would also lead tolower decreases in expenditures. Households would spend 2.8 percent less on average, with those in the bottom (top)decile spending 7.0 percent (1.5 percent) less.

Suggested Citation

  • Lara Ibarra,Gabriel & Rubião,Rafael Macedo & Simoes Fleury,Eduardo, 2021. "Indirect Tax Incidence in Brazil : Assessing the Distributional Effects of Potential Tax Reforms," Policy Research Working Paper Series 9891, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9891
    as

    Download full text from publisher

    File URL: http://documents.worldbank.org/curated/en/606861640025992934/pdf/Indirect-Tax-Incidence-in-Brazil-Assessing-the-Distributional-Effects-of-Potential-Tax-Reforms.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pierre Bachas & Lucie Gadenne & Anders Jensen, 2024. "Informality, Consumption Taxes, and Redistribution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(5), pages 2604-2634.
    2. Hunt Allcott & Benjamin B Lockwood & Dmitry Taubinsky, 2019. "Regressive Sin Taxes, with an Application to the Optimal Soda Tax," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1557-1626.
    3. Youssef Benzarti & Dorian Carloni, 2019. "Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France," American Economic Journal: Economic Policy, American Economic Association, vol. 11(1), pages 38-63, February.
    4. Fernando Gaiger Silveira & Fernando Rezende & Jose Roberto Afonso & Jhonatan Ferreira, 2013. "Fiscal Equity: Distributional Impacts of Taxation and Social Spending in Brazil," One Pager 221, International Policy Centre for Inclusive Growth.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pierre Bachas & Lucie Gadenne & Anders Jensen, 2024. "Informality, Consumption Taxes, and Redistribution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(5), pages 2604-2634.
    2. Asatryan, Zareh & Gomtsyan, David, 2020. "The incidence of VAT evasion," ZEW Discussion Papers 20-027, ZEW - Leibniz Centre for European Economic Research.
    3. Hausman, Catherine & Stolper, Samuel, 2021. "Inequality, information failures, and air pollution," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    4. Guillaume Bérard & Alain Trannoy, 2017. "The Impact of a Rise in the Real Estate Transfer Taxes on the French Housing Market," Working Papers halshs-01582528, HAL.
    5. Koeniger, Winfried & Kress, Peter, 2024. "The effect of unconventional fiscal policy on consumption: New evidence based on transactional data," CFS Working Paper Series 724, Center for Financial Studies (CFS).
    6. Hummel, Albert Jan & Ziesemer, Vinzenz, 2023. "Food subsidies in general equilibrium," Journal of Public Economics, Elsevier, vol. 222(C).
    7. Michael Funke & Raphael Terasa, 2020. "Will Germany's Temporary VAT Tax Rates Cut as Part of the Covid-19 Fiscal Stimulus Package Boost Consumption and Growth?," CESifo Working Paper Series 8765, CESifo.
    8. Francesca Parodi, 2024. "Consumption Tax Cuts In A Recession," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(1), pages 117-148, February.
    9. Tang, Yajun & Wang, Li & Shu, Haicheng, 2024. "“Tax reduction” and the financialization of real enterprises: Evidence from China’s “VAT reform”," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 835-850.
    10. Matthew Fisher-Post & Amory Gethin, 2023. "Government Redistribution and Development Global Estimates of Tax and Transfer Progressivity 1980-2019," Working Papers halshs-04423529, HAL.
    11. Carlos Renato De Melo Castro & Maria Eduarda Tannuri-Pianto, 2018. "Educação Superior Pública No Brasil: Custos, Benefícios E Efeitos Distributivos," Anais do XLIV Encontro Nacional de Economia [Proceedings of the 44th Brazilian Economics Meeting] 64, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    12. Mr. Younes Zouhar & Jon Jellema & Nora Lustig & Mohamed Trabelsi, 2021. "Public Expenditure and Inclusive Growth - A Survey," IMF Working Papers 2021/083, International Monetary Fund.
    13. Wisarut Suwanprasert, 2024. "Trade Theory with Behavioral Agents," PIER Discussion Papers 216, Puey Ungphakorn Institute for Economic Research.
    14. Osaid Alshamleh & Glenn Paul Jenkins & Tufan Ekici, 2024. "Excise tax incidence: the inequity of taxing obesity and beauty," Applied Economics, Taylor & Francis Journals, vol. 56(27), pages 3181-3193, June.
    15. Maria Alessandra Antonelli & Valeria De Bonis & Angelo Castaldo & Alessandrao Gandolfo, 2022. "Sin goods taxation: an encompassing model," Public Finance Research Papers 52, Istituto di Economia e Finanza, DSGE, Sapienza University of Rome.
    16. Goeyvaerts, Geert, 2023. "Reconstructing cities: Stimulating redevelopment through the tax code," Regional Science and Urban Economics, Elsevier, vol. 99(C).
    17. Harju, Jarkko & Kosonen, Tuomas & Skans, Oskar Nordström, 2018. "Firm types, price-setting strategies, and consumption-tax incidence," Journal of Public Economics, Elsevier, vol. 165(C), pages 48-72.
    18. Benzarti, Youssef & Harju, Jarkko, 2021. "Can payroll tax cuts help firms during recessions?," Journal of Public Economics, Elsevier, vol. 200(C).
    19. Jing Xing & Katarzyna A. Bilicka & Xipei Hou & Sepideh Raei, 2022. "How Distortive are Turnover Taxes? Evidence from Replacing Turnover Tax with VAT," NBER Working Papers 29650, National Bureau of Economic Research, Inc.
    20. Thiemo Fetzer, 2022. "Subsidising the spread of COVID-19: Evidence from the UK’S Eat-Out-to-Help-Out Scheme," The Economic Journal, Royal Economic Society, vol. 132(643), pages 1200-1217.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:9891. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.