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The Roots of Brazil's Heavy Taxation


Latin America is widely known as a low-tax region, but Brazil defies that description with a tax burden almost double the regional average. Though longstanding, Brazil’s position atop the tax burden ranking is not a historical constant. As recently as the early 1950s three other countries, Argentina, Chile and Uruguay, had similar or even heavier burdens. However, by the early 1980s Brazil had emerged as the most heavily taxed country in Latin America, and subsequent decades reinforced that status. This article seeks to uncover the roots of Brazil’s heavy taxation by examining the process through which it rose to the top of the regional ranking and managed to stay there. It emphasises two variables, the social class bases of public sector growth and the degree of support for democracy among key political actors. Despite changing over time, these variables have consistently interacted in ways that favour rising taxation.

Latinoamérica es conocida ampliamente como una región de impuestos bajos, pero Brasil desafía esta descripción con una carga impositiva de casi el doble del promedio regional. Aunque inicialmente no se encontraba en el en lo más alto del ranking regional, a principios de los años 1980 Brasil emergió como el país de mayores impuestos en América Latina. Este artículo busca explicar la trayectoria de Brasil al examinar el proceso por el cual superó a Argentina, Chile y Uruguay como el país con más carga impositiva y las razones por las que los impuestos continuaron su expansión en las dos últimas décadas. El estudio hace énfasis en dos variables: las clases sociales detrás del crecimiento del sector público y el grado de apoyo a la democracia de parte de actores políticos clave. Estas variables han interactuado de formas diversas en diferentes periodos, aunque han contribuido sistemáticamente a la elevación tributaria.

A América Latina é amplamente conhecida por ser uma região de baixos impostos. No entanto, com uma carga tributária de quase o dobro da média regional, o Brasil desafia esta descrição. Embora inicialmente não figurasse no topo do ranking regional, no início da década de 1980 o Brasil emergiu como o país onde se aplicam os maiores impostos na América Latina. Este artigo busca explicar a trajetória brasileira examinando o processo através do qual o país ultrapassou a Argentina, o Chile e o Uruguai para tornar-se aquele com a maior carga tributária; e os motivos pelos quais os impostos continuaram aumentando nas últimas duas décadas. Enfatizam-se duas variáveis: as bases classistas do crescimento do setor público e o nível de apoio à democracia entre importantes atores políticos. Estas variáveis interagem de diversas maneiras em diferentes períodos, mas têm sistematicamente contribuído para o aumento de impostos.

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1 Unless otherwise noted, tax data are from CEPALSTAT, the database of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), and the Latin America and the Caribbean Fiscal Burden Database, compiled by the Inter-American Centre of Tax Administration (CIAT) and the Inter-American Development Bank (IDB). The OECD figure is from OECD, Revenue Statistics, 1965–2012, 2013.

2 Marcus André Melo, ‘The Political Viability of Progressive Tax Reforms in Brazil’, seminar on Taxation and Equality in Latin America, Woodrow Wilson Center, 2012.

3 It does not address the question of whether Brazil's tax burden is beneficial, which would require a different research design.

4 Marcus André Melo, Carlos Pereira and Saulo Souza, ‘The Political Economy of Fiscal Reform in Brazil: The Rationale for the Suboptimal Equilibrium’, IDB Working Paper 117, 2010; José Roberto Afonso, ‘A economia política da reforma tributária: o caso Brasileiro’, Woodrow Wilson Center, 2013.

5 In other words, the case selection constitutes a ‘most-similar systems’ comparison. See Adam Przeworski and Henry Teune, The Logic of Comparative Social Inquiry (New York: Wiley-Interscience, 1970).

6 See, for example, Pessino, Carola and Fenochietto, Ricardo, ‘Determining Countries’ Tax Effort’, Revista de Economía Política, 195: 4 (2010), pp. 6587, and Timothy Besley and Torsten Persson, ‘Taxation and Development’, Centre for Economic Policy Research, 2013.

7 James Mahoney and Dietrich Rueschemeyer, ‘Comparative Historical Analysis: Achievements and Agendas’, in Mahoney and Rueschemeyer (eds.), Comparative Historical Analysis in the Social Sciences (Cambridge: Cambridge University Press, 2003), pp. 3–38.

8 The term ‘popular’ as used here encompasses both manual labourers and some white-collar workers. This usage, while not universal, is fairly conventional in the study of Latin American politics. For example, see David Collier (ed.), The New Authoritarianism in Latin America (Princeton, NJ: Princeton University Press, 1979) and, more recently, Marcus J. Kurtz, Latin American State Building in Comparative Perspective: Social Foundations of Institutional Order (Cambridge: Cambridge University Press, 2013).

9 IBGE, Estatísticas do Século XX.

10 Data are from World Bank, ‘Current Economic Position and Prospects of Brazil,’ 1965, Annex 3, pp. 22 and 26, for the earlier period, and CEPALSTAT for the later period.

11 Ibid.

12 Luigi Bernardi, Alberto Barreix, Anna Marenzi and Paola Profeta (eds.), Tax Systems and Tax Reforms in Latin America (London: Routledge, 2007).

13 See Table 2 for sources.

14 In 2012, for example, four countries had a higher per capita GDP and three were less than 20 per cent below Brazil. See CEPALSTAT.

15 Pessino and Fenochietti, ‘Determining Countries’ Tax Effort’.


17 Rodrik, Dani, ‘Why Do More Open Countries have Bigger Governments?’, Journal of Political Economy, 106: 5 (1998), pp. 9971032.


19 Bernardi, Barreix, Marenzi and Profeta, Tax Systems and Tax Reform.

20 José Serra and José Roberto Afonso, ‘Tributação, seguridade e coesão social no Brasil’, ECLAC Série políticas sociales 133, 2007.

21 Brazil's annual inflation between 2003 and 2012 averaged 6.4 per cent, compared to a regional average of 6.7 per cent, according to CEPALSTAT.

22 Geoffrey Brennan and James M. Buchanan, The Power to Tax: Analytical Foundations of a Fiscal Constitution (Cambridge: Cambridge University Press, 1980); Rodden, Jonathan, ‘Revising Leviathan: Fiscal Federalism and the Growth of Government’, International Organisation, 57 (2003), pp. 695729.

23 Stein, Ernesto, ‘Fiscal Decentralization and Government Size in Latin America’, Journal of Applied Economics, II: 2 (1999), pp. 357–91.

24 Diaz-Cayeros, Federalism, Fiscal Authority, and Centralization.

25 Cárdenas, Mauricio, ‘State Capacity in Latin America’, Economía, 10: 2 (2010), pp. 145; Besley and Persson, ‘Taxation and Development’. For a dissenting view, see Cheibub, José Antonio, ‘Political Regimes and the Extractive Capacity of Governments: Taxation in Democracies and Dictatorships’, World Politics, 50: 3 (1998), pp. 349–76.

26 Paul Drake, Between Tyranny and Anarchy: A History of Democracy in Latin America, 1800–2006 (Stanford, CA: Stanford University Press, 2009), p. 6.

27 Meltzer, Allan H. and Richard, Scott F., ‘A Rational Theory of the Size of Government’, Journal of Political Economy, 89: 5 (1981), pp. 914–27.

28 Cárdenas, ‘State Capacity’.

29 Carles Boix, Democracy and Redistribution (Cambridge: Cambridge University Press, 2003); Daron Acemoglu and James A. Robinson, Economic Origins of Dictatorship and Democracy (Cambridge: Cambridge University Press, 2006).

30 Latinobarómetro. Various years. Análisis de resultados en línea.

31 Charles Tilly, Coercion, Capital and European States: AD 990–1992 (Oxford: Blackwell, 1990).

32 Miguel Angel Centeno, Blood and Debt: War and the Nation-State in Latin America (University Park, PA: Penn State University Press, 2003); Kurtz, Latin American State Building.

33 Benno Torgler, Tax Compliance and Tax Morale: A Theoretical and Empirical Analysis (Cheltenham: Edward Elgar, 2007); Marcelo Bergman, Tax Evasion and the Rule of Law in Latin America: The Political Culture of Cheating and Compliance in Argentina and Chile (University Park, PA: Penn State University Press, 2009).

34 Latinobarómetro.

35 James Alm and Jorge Martínez-Vázquez, ‘Tax Morale and Tax Evasion in Latin America’, Andrew Young School of Public Policy, 2007, p. 70; Mexico figure calculated from raw data.

36 Ross, ‘Does Oil Hinder Democracy?’, World Politics, 53: 3 (2001), 325–61.

37 Patrucchi, Leticia and Grottola, Leonardo, ‘Estructura tributaria, ingresos rentísticos y regresividad en América Latina’, Leviathan, 2 (2011), pp. 96122.

38 CIAT-IDB. Brazil's total public revenues in 2008–12 averaged 36.4 per cent of GDP, compared to 30.3 per cent in Bolivia and 20.1 per cent in Venezuela. Its closest regional rival was actually Uruguay, at 32.7 per cent.

39 Cameron, David R., ‘The Expansion of the Public Economy: A Comparative Analysis’, The American Political Science Review, 72: 4 (1978), pp. 1243–61; Steinmo, Sven and Tolbert, Caroline J., ‘Do Institutions Really Matter? Taxation in Industrialized Democracies’, Comparative Political Studies, 31: 2 (1998), pp. 165–87; Ernesto Stein and Lorena Caro, ‘Ideology and Taxation in Latin America’, IDB Working Paper 407, 2013.

40 Evelyne Huber and John D. Stephens, Democracy and the Left: Social Policy and Inequality in Latin America (Chicago: University of Chicago Press, 2012); Walter Korpi, The Democratic Class Struggle (London: Routledge, 1983).

41 Kenneth M. Roberts, ‘The Politics of Inequality and Redistribution in Latin America's Post-Adjustment Era’, World Institute for Development Economics Research, 2012, p. 6.

42 Fairfield, Tasha, ‘Business Power and Tax Reform: Taxing Income and Profits in Chile and Argentina’, Latin American Politics and Society, 52: 2 (2010), pp. 5171; Private Wealth and Public Revenue in Latin America: Business Power and Tax Politics (Cambridge: Cambridge University Press, 2015).

43 Aaron Schneider, State-Building and Tax Regimes in Central America (Cambridge: Cambridge University Press, 2013).

44 Lieberman, Race and Regionalism; Flores-Macías, Gustavo, ‘Financing Security through Elite Taxation: The Case of Colombia's “Democratic Security Taxes”’, Studies in Comparative International Development, 49: 4 (2014), pp. 477500.

45 Ben Ross Schneider, Business Politics and the State in Twentieth Century Latin America (Cambridge: Cambridge University Press, 2004), chap. 4.

46 Melo et al., ‘The Political Economy’, p. 24.

47 Schneider, Business Politics, p. 96.

48 Melo, Marcus André, ‘O leviatã brasileiro e a esfinge argentina: os determinantes institucionais da política tributária’, Revista Brasileira de Ciências Sociais, 20: 58 (2005), pp. 91129, and Institutional Weakness and the Puzzle of Argentina's Low Taxation’, Latin American Politics and Society, 49: 4 (2007), pp. 115–48.

49 Serra and Afonso, ‘Tributação’; Melo et al., ‘The Political Economy’; Afonso, ‘A economia política’.

50 Detlef Nolte, ‘Reformas constitucionales en América Latina en perspectiva comparada: la influencia de factores institucionales’, German Institute of Global and Area Studies, 2011, p. 2.

51 Rogério Bastos Arantes and Cláudio Gonçalves Couto, ‘A constituição sem fim’, in Simone Diniz and Sérgio Praça (eds.), Vinte anos de constituição (São Paulo: Paulus, 2008), pp. 31–60.

52 Ibid.


54 Meiriane Nunes Amaro, ‘Terceira reforma da previdência: até quando esperar?’, Centro de Estudos da Consultoría do Senado, 2011, p. 20.

55 Fabrício A. de Oliveira, A reforma tributária de 1966 e a acumulação de capital no Brasil (Belo Horizonte: Nossa Terra, 1991); Ricardo Varsano, ‘La reforma tributaria en Brasil: el largo proceso en curso’, IDB, 2003.

56 Nakahodo, Sidney Nakao and Savoia, José Roberto, ‘A reforma da previdência no Brasil: estudo comparativo dos governos Fernando Henrique Cardoso e Lula’, Revista Brasileira de Ciências Sociais, 23: 66 (2008), pp. 4558.

57 Amendments require a 3/5 majority in both legislative chambers in two rounds of voting. By international standards this is a ‘medium-low’ bar, according to Rogério Bastos Arantes and Claudio Gonçalves Couto, ‘Uma constituição incomun’, in Maria Alice Rezende de Carvalho, Cícero Araújo and Júlio Simões (eds.), A constituição de 1988: passado e futuro (São Paulo: Hucitec, 2009), p. 45.

58 Ibid.

59 José Roberto Afonso, ‘Brasil: nuevos acuerdos fiscales’, in Jorge Rodríguez Cabello and Francisco Javier Díaz (eds.), Camino para la reforma: estrategia política de un acuerdo fiscal (Santiago: CIEPLAN, 2013), p. 73.

60 Peter H. Smith, Democracy in Latin America: Political Change in Comparative Perspective, 2nd ed. (Oxford: Oxford University Press, 2011); Scott Mainwaring and Aníbal Pérez-Liñán, Democracies and Dictatorships in Latin America: Emergence, Survival, and Fall (Cambridge: Cambridge University Press, 2013).

61 Cetrángolo and Gómez Sabaini, ‘Política tributaria en Argentina’, p. 27.

62 William C. Smith, Authoritarianism and the Crisis of the Argentine Political Economy (Stanford, CA: Stanford University Press, 1991).

63 Daniel Azpiazu and Martín Schorr, Hecho en Argentina: industria y economía, 1976–2007 (Buenos Aires: Siglo XXI, 2010).

64 Gaggero, Jorge, ‘Marco histórico (y propósitos de esta empresa)’, Voces en el Fénix, 13 (2012), pp. 611.

65 Jorge Notaro, ‘La batalla que ganó la economía, 1972–1984’, in Benjamin Nahum (ed.), El Uruguay del siglo XX: la economía (Montevideo: Banda Oriental, 2003); Paola Azar, Magdalena Bertino, Sebastián Fleitas, Ulises García Repetto, Claudia Sanguinetti, Mariana Sienra and Milton Torrelli, ¿De quiénes, para quiénes y para qué? Las finanzas públicas en el Uruguay del siglo XX (Montevideo: Universidad de la República, 2009).

66 Oliveira, A reforma tributária.

67 IBGE, Estatisticas do Século XX.

68 Peter Evans, Dependent Development: The Alliance of Multinational, State, and Local Capital in Brazil (Princeton, NJ: Princeton University Press, 1979).

69 Carmelo Mesa-Lago, Social Security in Latin America: Pressure Groups, Stratification, and Inequality (Pittsburgh, PA: University of Pittsburgh Press, 1978).

70 World Bank, ‘Current Economic Position,’ Annex 3, p. 9.

71 Carmelo Mesa-Lago, Ascent to Bankruptcy: Financing Social Security in Latin America (Pittsburgh, PA: University of Pittsburgh Press. 1989), p. 26.

72 Reliable social security spending figures are lacking for this period, but in 1950–5 Argentine social security revenues were 6–7 per cent of GDP, according to Cetrángolo and Gómez Sabaini, ‘Política tributária’, p. 27. This figure is similar to Chile and Uruguay during the same period and suggests a far higher level of spending than in Brazil.

73 Calculated using union membership data from Guillermo O'Donnell, Modernisation and Bureaucratic Authoritarianism, 2nd ed. (Berkeley, CA: University of California, 1979), p. 40, and labour force figures from Base de Datos de Historia Económica de América Latina Montevideo – Oxford (MOxLAD), accessed at:

74 Ruth Berins Collier and David Collier, Shaping the Political Arena (Princeton, NJ: Princeton University Press, 1991).

75 Handleman, Howard, ‘Labor-Industrial Conflict and the Collapse of Uruguayan Democracy’, Journal of Interamerican Studies and World Affairs, 23: 4 (1981), pp. 371–94.

76 Alfred Stepan, ‘Political Leadership and Regime Breakdown: Brazil’, in Juan Linz and Stepan (eds.), The Breakdown of Democratic Regimes: Latin America (Baltimore, MD: Johns Hopkins University Press, 1978), pp. 110–37; Argelina Figueiredo, Democracia ou reformas? Alternativas democráticas à crise política, 1961–1964 (Rio de Janeiro: Paz e Terra, 1993).

77 Francisco C. Weffort, O populismo na política brasileira (Rio de Janeiro: Paz e Terra, 1980).

78 Eli Diniz and Renato Raul Boschi, Empresariado nacional e estado no Brasil (Rio de Janeiro: Forense-Universitária, 1978), p. 191.

79 Philippe Schmitter, Interest Conflict and Political Change in Brazil (Stanford, CA: Stanford University Press, 1971), pp. 375–6.

80 Evans, Dependent Development; Peter R. Kingstone, Crafting Coalitions for Reform: Business Preferences, Political Institutions and Neoliberal Reform in Brazil (University Park, PA: Penn State University Press, 1999); Gail D. Triner, Mining and the State in Brazilian Development (London: Pickering and Chatto, 2011).

81 Kathryn Sikkink, Ideas and Institutions: Developmentalism in Brazil and Argentina (Ithaca, NY: Cornell University Press, 1991), p. 67.

82 Diniz and Boschi, Empresariado nacional, p. 191; Schneider, Business Politics, p. 112.

83 Indira Palacios-Valladares, Industrial Relations after Pinochet: Firm Level Unionism and Collective Bargaining Outcomes in Chile (London: Peter Lang, 2010).

84 Oscar Landerretche, ‘Economic Policy and the Ideology of Stability’, in Kirsten Sehnbruch and Peter Siavelis (eds.), Democratic Chile: The Politics and Policies of a Historic Coalition, 1990–2010 (Boulder, CO: Lynne Rienner, 2013), pp. 173–98.

85 Tasha Fairfield, ‘The Political Economy of Progressive Tax Reform in Chile’, Woodrow Wilson Center, 2014; Jennifer Pribble, Welfare and Party Politics in Latin America (Cambridge: Cambridge University Press, 2013).

86 Murillo, María Victoria, ‘Cambio y continuidad del sindicalismo en democracia’, Revista SAAP 7: 2 (2013), pp. 339–48.

87 Azpiazu and Schorr, Hecho en Argentina.

88 Rosa Osimani and Rosina Estol, ‘Apertura comercial y crecimiento económico: evidencia del caso uruguayo en los últimos 30 años’, Centro de Investigaciones Económicas, Montevideo, 2007.

89 Kritzer, Barbara E., ‘Social Security Privatization in Latin America’, Social Security Bulletin, 63: 2 (2000), pp. 1737.

90 Gustavo Méndez, Luís Senatore and Federico Traversa, La política laboral de un proyecto socialdemócrata periférico: un análisis de los cambios institucionales en Uruguay 2005–2009 (Montevideo: Friedrich Ebert Stiftung, 2009), pp. 13–14.

91 ECLAC, Time for Equality, 2010, p. 53.

92 Roberts, ‘The Politics of Inequality’, p. 6.

93 Eder Sader, Quando novos personagens entraram em cena: experiências e lutas dos trabalhadores da grande São Paulo 1970–1980 (São Paulo: Paz e Terra, 1988).

94 Sarah Brooks, Social Protection and the Market in Latin America: The Transformation of Social Security Institutions (Cambridge: Cambridge University Press, 2008).

95 Research by the Folha de São Paulo showed that 41.4 per cent of PMDB delegates were ideologically left of centre, compared to only 16.9 per cent who were right of centre. Javier Martínez-Lara, Building Democracy in Brazil: The Politics of Constitutional Change 1985–1995 (London: Palgrave Macmillan, 1996), p. 68.

96 Kurt Weyland, Democracy without Equity: Failures of Reform in Brazil (Pittsburgh, PA: University of Pittsburgh Press, 1996).

97 Weyland, Democracy without Equity, chap. 6; Brooks, Social Protection and the Market.

98 Fundação Perçeu Abramo, ‘Densidade sindical e recomposição da classe trabalhadora no Brasil’, 2013, p. 8.

99 Fabio Giambiagi, ‘Dezessete anos de política fiscal no Brasil: 1991–2007’, Texto de Discussão 1309, IPEA, p. 27.

100 ECLAC, Panorama Social de América Latina 2010, p. 167.

101 Giambiagi, ‘Dezessete anos’, p. 35.

102 Mainwaring and Pérez-Liñan, Democracies and Dictatorships, p. 16.

103 Adam Przeworski, Democracy and the Market: Political and Economic Reforms in Eastern Europe and Latin America (Cambridge: Cambridge University Press, 1991).

104 See, for example, Korpi, The Democratic Class Struggle; Steinmo and Tolbert, ‘Do Institutions Really Matter?’; and Huber and Stephens, Democracy and the Left.

105 Fairfield, Private Wealth and Public Revenue.

* I would like to thank José Roberto Afonso, Alberto Barreix, Oscar Cetrángolo, Ulises García Repetto, Juan Carlos Gómez Sabaini, Michael Hanni and Fabrício Augusto de Oliveira for their assistance with gathering and interpreting tax data, and I would also like to thank Fabrício, Matthew Carnes, Evelyne Huber, and Indira Palacios-Valladares for their comments on earlier versions of the article. I have also benefited from comments from Gustavo Flores-Macías, Jim Mahon and Aaron Schneider. Finally, I would like to express my gratitude to Margaret Petersen and Stephen Rowe for their diligent research assistance.

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