Single-rate in the taxation of goods and services

Abstract

Brazil has been discussing for years the reform of its taxation on consumption, and PECs 45 and 110 that give the current outline of the debate were inspired by the best international practices. This means that the VAT to be created would be levied on a broad basis, which would include goods and services, would be informed by the destination principle, and would contain a single rate for all goods and services. The proposal to introduce a single rate, however, faces a lot of resistance. It is argued that a single rate would make the system more regressive. My aim is to analyze the international debate on the subject to reorganize and qualify the national debate from this perspective. I intend to analyze the arguments for and against a uniform tax rate on consumption and to trace the arguments back to their economic foundations. All this to demonstrate how uniform rates are more effective both with regard to economic efficiency and with regard to a greater and more adequate distribution of income. (AU)