Brazil’s National Congress approved a selective tax on tobacco, soft drinks, and alcohol this week as part of wide-ranging fiscal reform that also saw a reduction in taxes on healthy foods.

The trio of unhealthy consumables is now located in the same tax category as harmful goods and products including coal, vehicles and betting.

The specific tax rates for tobacco, alcohol, and soft drinks will be determined in 2025, but they will need to be high enough to deter consumers from buying these products to have an impact on health. 

The Congressional vote is a victory for advocacy groups as the Brazilian Senate had removed sugary drinks from the selective tax a week earlier, causing a public outcry.

The tax reform also establishes a National Basic Food Basket (CBNA) that will be tax-exempt. Meat, poultry and fish are included in this basket.

In addition, taxes have been slashed by 60% on horticultural and minimally processed goods including crustaceans, dairy products, honey, flour, cereals, pasta, juices, bread, nuts and fruit.

Lowering the price of healthy food

Brazilian legislators and civil society advocates aim to ensure that the prices of healthy foods are not higher than those of ultra-processed and unhealthy products.

 “This is a landmark moment for Brazil and a historic victory for global public health,” said Pedro de Paula, regional country director for the global public health organisation Vital Strategies in Brazil.

“By implementing a tax on these products, Brazil is not only saving lives by curbing the consumption of harmful products but also championing equitable access to healthier, more sustainable alternatives.  We commend Brazil’s National Congress for their leadership in this critical effort.”

De Paul said fiscal reform was necessary as Brazil had a “very complex, clunky system for production and consumer taxes”.

The new selective tax is an excise tax “for a handful of products which had clear negative externalities in terms of health and environment’, he added.

“This is landmark change, since it establishes a system that has clear taxes on top of the general VAT-like taxing structure with a clear narrative and purpose of reducing consumption and internalising the costs of the mentioned negative externalities,” he added.

While the tax will not be ring-fenced for health, De Paulo said that as the health system in Brazil is based on universal and free access, “any additional revenue implies additional minimum investments on health.”

However, Vital Strategies raised concerns about some of the provisions, such as “the inclusion of infant formula in the basic food basket and reduced tax rates for small alcohol producers.”

It will “collaborate closely with partners to advocate for tax rates that prioritise public health”, as “setting these rates at levels that significantly reduce consumption of harmful products will protect communities from preventable diseases.”

Sweetened beverages including soft drinks, artificial juices, and teas are “among the most consumed food groups in Brazil, with an average consumption of 65 litres per year per individual,” according to a recent article in the journal, Nature.

“Excess sugar is considered one of the main causes of excess weight and, consequently, its associated diseases (type 2 diabetes, hypertension). Therefore, the consumption of sugar-sweetened beverages is associated with an increased risk of developing obesity.”

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