Brazil Hikes Beer Tax Before World Cup
April 4, 2014 Taxation in Brazil
BRASILIA – The government of Brazil is raising taxes on beer, with the hope of cashing in on the influx of tourists and celebrations during the upcoming World Cup.
Earlier this week the Ministry of Finance of Brazil issued a new statement saying that the taxes on beer, and other selected beverages such as carbonated beverages, energy drinks and juices, will be raised immediately, effectively hiking the retail price of such products by up to 0.4 percent, or USD 0.01 per bottle of beer.
The increased tax collections from the sale of drinks is expected to bring in an extra BRL 200 million this year alone, as the demand for beer and other cold drinks is expected to be particularly high during the World Cup in June and July this year.
The extra revenues from the tax hike have already been earmarked to fund the development of infrastructure projects, in particular expanding the country’s current thermal electricity generation facilities.
The announcement of the tax increase was met with almost immediate disdain from the brewing industry in Brazil, with the prominent beer sector advocacy group CervBrasil claiming that over the last two years the taxes on cold drinks, including beer, have risen by 20 percent more than inflation, and the latest hike would force producers to raise their prices by as much as 1.5 percent in order to maintain the same level of profitability.
Photo by: Christian Benseler