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Brazil Postpones Tax Hike On Drinks

by Mike Godfrey, Tax-News.com, Washington

15 May 2014


The Brazilian government has decided to postpone until September a planned increase in taxes on certain drinks, to avoid adding to inflation.

Under the original plan, taxes on beer, certain fruit juices, and energy drinks would rise by an average of 1.5 percent on June 1, 2014, to coincide with Brazil hosting the soccer World Cup. It was expected that the increase would provide the government with an additional BRL200m (USD88m) in revenue this year.

Finance Minister Guido Mantega told reporters on May 13 that the tax increase would be put off until after the World Cup. The minister also pointed out that the tax hike will be phased in over several years.

It is estimated that the tax increase would result in a 2.25 percent increase in consumer prices, stoking the already high inflation in the country. It was reported in April that the consumer price index has expanded by about six percent on a year earlier.

TAGS: Finance | tax | economics | sales tax | energy | tax rates | Brazil | inflation

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