Brazil raises taxes on tobacco, alcohol and sugary drinks

Brazil is marking a major public health ambition with the adoption by its National Congress of an ambitious tax reform. Driven by public health and economic efficiency objectives, this initiative introduces selective taxation on harmful products such as tobacco, alcohol and sugary drinks while reducing the cost of essential foods. Widely welcomed by experts, this reform reflects Brazil's clear commitment to public health.

Alcohol, tobacco and sugary drinks are now in the same tax category as other harmful products and behaviors, such as coal or gambling.[1]. Details of the selective and significant tax rates, as well as technical adjustments to the new consumption taxes, will be finalized by 2025.

Reduce the consumption of harmful products

The newly approved legislation also provides for annual adjustments to taxes on tobacco, sugary drinks, and alcohol based on inflation. In addition, the creation of the “Cesta Básica Nacional de Alimentos” (CBNA) exempts a list of basic foods, such as meat, fish, and horticultural products, from taxes. A 60 % tax reduction also applies to minimally processed foods, such as nuts, grains, and dairy products. This initiative aims to reverse the current trend where ultra-processed products are often more economically accessible than healthy foods. By making the latter more affordable, the government hopes to permanently change the eating habits of Brazilian households.

This reform is a decisive step against noncommunicable diseases (NCDs), including cardiovascular diseases, cancer and type II diabetes, linked to tobacco use and the consumption of sugary drinks and alcohol. By adopting a tax strategy focused on health promotion, Brazil joins a growing list of countries that use taxation to improve public health and provide additional financial resources to the country.

Brazil, a pioneering country in the fight against smoking

Banning smoking in public places, banning advertising, increasing taxes, etc., Brazil has taken strong legislative measures to protect the health of its citizens. It is an example to follow for emerging and developing countries. In July 2019, Brazil became the second country to fully implement all the measures of the WHO treaty, the Framework Convention on Tobacco Control, with the aim of reducing tobacco consumption and protecting the population from NCDs.

During the 10^e Conference of the Parties to the WHO Framework Convention on Tobacco Control (FCTC) in February, Brazil played a leading role in fully implementing Article 18 of the treaty, which is dedicated to protecting the environment from harm caused by tobacco and its industry, supported by other countries in the region: Ecuador and Panama. The country also distinguished itself by demonstrating the intrinsic link between the protection of human rights and the fight against tobacco use. Brazil also banned the sale of heated tobacco and vaping devices throughout the country.[2].

Significant economic impacts

The selective tax is part of a broader overhaul of Brazil’s tax system. The bill PLP 68/24 aims to simplify the current complex tax structure by consolidating five existing taxes into a single consumption tax, divided between a federal rate (CBS) and a regional rate (IBS). At the same time, the government plans to use part of the revenue generated by the new selective tax to finance public health programs and support the most disadvantaged households.[3].

A system praised by public health experts yet to be perfected

Despite its progress, the reform has attracted some criticism. The inclusion of infant formula in the list of basic foods has been contested by nutrition experts. In addition, the reduced tax rates for small alcohol producers raise questions about the coherence of the approach taken.

Pedro de Paulo, regional director of Vital Strategies, nevertheless called the reform a "historic victory." He said that by targeting harmful products and making healthy foods more accessible, Brazil is paving the way for similar reforms in other countries.[4]. By combining tax reform with public health promotion, Brazil intends to show that it is possible to reconcile economic efficiency and public health. This ambitious reform will require rigorous implementation and careful monitoring to achieve its objectives.

©Tobacco Free Generation

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[1] Brazil's Congress Hikes Taxes on Sugary Drinks, Alcohol and Tobacco While Boosting Healthy Foods, Health Policy Watch, published December 20, 2024, accessed December 24, 2024

[2] Generation without tobacco, Brazil maintains ban on sale of heated tobacco and vaping products, published on April 29, 2024, consulted on December 24, 2024

[3] Brazil: National Congress passes Bill of Law (PLP 68/24) regulating the Tax Reform, Baker Mckenzie published December 19, 2024, accessed December 24, 2024

[4] Press release, “Historic Public Health Victory”: Vital Strategies Applauds Brazil’s Approval of Selective Tax on Tobacco, Soft Drinks, and Alcohol, Vital Strategies, published December 18, 2024, accessed December 24, 2024