MercoPress. South Atlantic News Agency

Taxing the “super rich” pays off for Brazil's gov't

“We're just bringing the super-rich into the same tax bracket as the middle class,” said Barreirinhas

Brazilian Finance Minister Fernando Haddad's policy of taxing the “super rich” yielded unprecedented returns of R$ 20.6 billion (US$ 3.32 billion) to the South American country's coffers in 2024, Federal Revenue Secretary Robinson Barreirinhas confirmed Tuesday. The strategy focuses on exclusive investment funds and offshore assets, it was explained.

Under the new scheme, previously untaxed exclusive funds now contributed R$ 13 billion (US$ 2.10 billion), while offshore investments added R$ 7.67 billion (US$ 1.24 billion), thus closing legal loopholes allowing the wealthy to dodge substantial contributions. “This is about justice,” Barreirinhas argued. According to Brazilian Government figures, the economy grew by around 3.5% last year.

Total federal tax revenues reached R$ 2.65 trillion (US$ 427.42 billion), a 9.62% increase from 2023, which coupled with other measures resulted in an additional R$ 18.3 billion (US$ 2.95 billion) collection. Corporate taxes also grew by 14.84%, in line with Haddad's policy taxing offshore wealth and specialized financial instruments.

By targeting an estimated R$ 1 trillion ($161.29 billion) in previously untaxed foreign assets, the government of President Luiz Inácio Lula da Silva sought to reduce inequality and improve public finances. Barreirinhas also insisted during a press conference that an increase in pay scales, as well as a reduction in unemployment, were among the factors driving up tax collection. “The numbers reflect the reactivation of the economy last year, with spectacular results,” he said. He also claimed there was no increase in the tax burden, but a regularization of the wealthiest who did not pay taxes. “We're just bringing the super-rich into the same tax bracket as the middle class,” said Barreirinhas.

Haddad's “fiscal justice” sought that everybody contributed “their fair share,” Barreirinhas also noted while highlighting how small taxpayers and productive entrepreneurs were spared from this initiative.

Last year's R$ 2.71 trillion represented the highest collection ever after inflation corrections since the category started being measured in 1995.

Claudemir Malaquias, head of the Revenue’s Center for Tax and Customs Studies, highlighted that tax transactions carried out directly with the Federal Revenue Service resulted in revenue of R$ 5.4 billion in 2024 while the amount collected through the Tax Appeals Administration Council (Carf) totaled R$ 307.8 million, way below the expected R$ 54.7 billion.