The (Un)constitutionality Inherent in Tax Regressivity in Brazil

Abstract

The Federal Constitution in its art. 1 exposes the foundations of the Federative Republic of Brazil, specifi cally in inc. III, reports on eradicating poverty and marginalization and reducing social and regional inequalities. This principle is of refl ex eff ectiveness, which the State must observe in the production of its norms and public policies. The scenario of Brazilian society is recognized for its persistent social inequality based on the concentration of income and wealth, racial and gender, lack of investments in health, education and infrastructure. Data from the World Inequality Lab¹, that is, the Laboratory of World Inequality, analyzing the years 2001 to 2021, points Brazil among the members of the G20 as being the second most unequal in the world, in which around 59% of the total national income is concentrated in the hands of the richest 10%, the poorest 50% earn an income about 29 times less than the richest 10%, and the latter hold almost 80% of the country’s private assets. In addition, tycoons, represented by the wealthiest 1% of the population, controlling practically half (48.9%) of national wealth in 2021. One of the most determining causes for these results is the tax burden, which taxes more on consumption, than on income and equity. The objective of this research is to answer whether the Brazilian Tax System has shown to follow the constitutional right to reduce social and regional inequalities in the country? The hypothesis is that only a tax reform that reverses unfair regressivity can regulate the tax system so that it is eff ectively constitutional. The research is based on studies and theories of bodies and specialists in the subject.