Brazil plans new “sin tax” on alcohol, cigarettes and sugary drinks

The Brazilian government is preparing a new selective “sin tax” as part of its tax reform. The measure would add an extra levy on products considered harmful to health or the environment, including alcoholic beverages, cigarettes, sugary drinks, high‑pollution vehicles, aircraft, mining outputs and gambling. The tax would apply from 2027, but only after a specific regulation is approved by Congress; the federal government intends to submit the proposal by the end of the year. Estimates cite the health costs of alcohol at R$ 18.8 billion in 2019 and tobacco‑related costs at R$ 86.3 billion annually, a gap the tax aims to narrow. Unlike other consumption taxes, the sin tax would not allow credit recovery along the production chain and would largely replace the current industrialized‑product tax (IPI). Industry groups warn that the added burden could further raise already high tax levels on many products.