“Selective Tax Has Next Steps Defined by Lula Government”
Valor reports:
“President Luiz Inácio Lula da Silva’s economic team has decided that the rates of the Selective Tax will be proposed to the National Congress via provisional measure (MP), to guarantee that collection can begin on January 1, 2027, as provided for in the consumption tax reform.
“The Ministry of Finance, Valor has learned, is working to send the proposal together with the 2027 Annual Budget Bill (PLOA), on the 31st of this month or in early September.”
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Other Articles on the Same Topic
- Selective Tax Rates Should Reach Congress in September (Contábeis)
- What Changes in the Tax Reform and What Remains Pending for the Future (Folha de S.Paulo)
Assessment
The rates proposal was originally expected in 2025. The Finance Ministry held it back while Congress finished the bill on how the new tax system will be administered, and the 2026 elections then narrowed the window for a vote.
An ordinary bill only becomes law once both chambers of Congress have approved it and the President has signed it, and Brazil’s constitution requires 90 days between a new tax becoming law and the start of collection – so a rates bill still under debate in October would push the Selective Tax past its 1 January 2027 start date.
A provisional measure is issued by the President and takes effect with the force of law on the day it is published, which means the 90-day period starts counting immediately, regardless of how long Congress takes to vote. Daniel Loria of the Finance Ministry’s tax reform secretariat describes the route as pragmatic. Congress still has the final word: a provisional measure lapses if it is not converted into law within 120 days, and Folha reports that if the measure is sent late or not voted, collection does not begin in January.
For alcohol, the design under discussion uses two rates at once: a specific component calculated on the quantity of pure alcohol and a percentage component on price. Taxing by alcohol content gives products with more alcohol a higher tax, which is the approach the World Health Organization recommends and which Brazil’s current system lacks. WHO data put the excise share on Brazilian beer at 2.28%, the lowest in the Americas.
The level is still open: the Finance Ministry’s technical team has according to media reports worked with two scenarios, one keeping the current tax level, with the Selective Tax replacing part of existing taxation, and one setting higher rates aimed at reducing population-level consumption of health harmful products. The first scenario would reproduce today’s tax level under the new system.
The alcohol industry and its allies are working toward that first scenario. The National Confederation of Industry (CNI) has asked the government to use the current IPI burden as the reference for the new tax and to hold that parity for two years – a formula for keeping alcohol taxation at today’s level for several years, through the transition. Finance Minister Dario Durigan has signalled a “smooth transition”, citing the political weight of the discussion in an election year. The pressure follows a year of intensifying spirits and wine industry interference around the Selective Tax and industry-funded studies deployed against the reform.
The Selective Tax is about to become Brazil’s main federal instrument for preventing and reducing alcohol harm. On 1 January 2027 the IPI is zeroed for most products, and the new tax takes over its role for the six product groups defined as harmful to health or the environment.
Alcohol harm costs Brazil an estimated R$18.8 billion in direct and indirect costs in 2019, in health care, lost productivity and premature deaths. These are costs the current tax system does not reflect.
The provisional measure is expected by mid-September, and its rates will show which scenario prevailed. Conversion into law then falls to a Congress in the middle of an election campaign, where the alcohol industry has spent the year making its case.