“Sin Tax: Government Says Taxation of Alcohol, Soft Drinks and Cigarettes Will Begin in 2027 to Reduce Use”
g1 reports:
“The Ministry of Finance reaffirmed its interest in implementing the Selective Tax next year, mainly for its regulatory effect of reducing the consumption of products harmful to health and the environment.”
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Soft Drinks, Alcohol and Cigarettes Set to Become More Expensive Under the New Tax (RealTime1)
Assessment
The Selective Tax was created by Brazil’s 2023 tax reform; what is live now is the regulation that will set the actual rates, which the government now says it will send to Congress by the end of 2026. For alcohol, the approved design follows international best practice: a specific rate set by alcohol content, so products with more pure alcohol are taxed more, combined with an ad valorem rate on price. Taxing the alcohol itself is what gives the policy its protective edge, discouraging the cheapest, strongest products that drive the most harm. This continues the trajectory Movendi tracked as the Brazilian alcohol tax debate gained momentum.
It is Congress that will set the alcohol rates. It’s a decisive question: a tax set too low protects no one, and alcohol industry is mobilising to keep it that way. The beer lobby Sindicerv – whose board is staffed by Ambev and Heineken, the two companies that control around 85% of Brazilian beer production – cites a 56% tax burden. Movendi has shown that figure to be deeply misleading: it bundles every tax on every input along the production chain, from energy to retailer margins, and presents the total as the tax in the bottle. WHO data put the excise on Brazilian beer at 2.28% – the lowest in the Americas.
The spirits lobby ABBD – which represents Diageo, Pernod Ricard, Bacardi and other multinationals – cite burdens above 80% and warn of job losses and an expanding illegal market. That figure rests on the same construction as the beer claim: WHO data place Brazil’s alcohol taxes – spirits included – among the lowest internationally, and the federal tax on spirits sits below 20% of the product price; 80% is reached only by stacking every state tax, social contribution and chain margin on top.
Movendi has previously documented ABBD deploying an industry-funded Euromonitor study to amplify illicit-trade fears, a tactic also used to stall tax reform in South Africa, Kenya and Uganda. The size of the illegal market mainly tracks enforcement, not alcohol tax levels. The job-loss claim fares no better against the evidence: peer-reviewed research finds that alcohol tax increases produce no net job loss and can raise total employment, as consumer spending and tax revenue shift into other sectors.
The industry also revives the claim that the tax falls hardest on low-income families. The evidence points the other way – the World Bank finds the poorest households gain the most, because they are most exposed to the harm and most responsive to price.
A Fiocruz study cited by the Ministry of Health put the cost of alcohol use in 2019 at R$18.8 billion, including R$1.1 billion in direct federal health spending. The World Bank estimates that around 341,000 deaths a year in Brazil – about 20% of all deaths – are attributable to tobacco, alcohol and sugary drinks, and that the country’s low prices for these products make them unusually affordable. Raising their price through taxation is a WHO “best buy” – the most cost-effective tool available to prevent and reduce harm.