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In Brazil, High Interests Are a Rich’s Best Friend

Brazil’s annualized benchmark interest rate of 19.75% – one of the highest in the world – is one of the mechanisms contributing to the perpetuation of social inequality in the country.

This is the opinion of the economist Marcelo Medeiros, coordinator of the Applied Research Institute (IPEA) in the United Nations (UN) International Poverty Center.


“When the government raises interest rates, it is helping people who have money in the bank,” he says.


Medeiros argues that one of the ways to begin redistributing income would be to have specific taxes on the rich.


“It is much more reasonable to tax non-productive activities than sectors that are accelerating the economy,” he affirms.


Medeiros conducted studies on the rich, in preparation for future work focusing on inequality. According to his most recent survey, in 1998, 1% of the country’s total population in 1998 (162 million people) possessed half of all the assets declared to the Federal Revenue agency.


According to an analysis by Flávio Comim, professor at the Federal University of Rio Grande do Sul and Cambridge University, “the machinery of the State in Brazil was oriented for the benefit of the rich, not the poor.”


Commenting Medeiros’ work, he adds that “the rich receive more benefits from the State and pay relatively less on a proportional basis.”


The moral of the story told by Medeiros, according to Comim, is evident: “It is necessary to make the Brazilian State less ‘pro-rich’ and more pro-poor.’ “


Agência Brasil

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  • Guest

    Noooooo…..
    ….taxing too much the corporations or the wealthy will simply increase tax evasion, accounting irregularities, money laundering and….corruption…or emigrations of entrepreneurs !!!!!

    Your country has already one of the highest tax rates…through your huge numbers of different taxes !!!!!

    If you just collect the true due taxes, by applying the laws, more money would flow into the government treasure.

    Then bureaucracy where you also are champions, should be reduced ! Less money would be spent by your government !

    The results would be also less money would be borowed from your government from the above…but also lower interest rates would be needed…further reducing government costs !!!
    Government should spend more on long term investments, such as roads, highways, health, education, low cost housing, various social programs. This would create long term jobs….so less poors !

    Government should reduce your incredible SELIC rate (compared to your inflation) and this would create more jobs as your economy would grow faster and longer !!!!!!

    Curiously, every country in the world, developped or not, have/had more government revenues from taxes, a better economy, reduction in poverty and social inequalities……WHEN THEY REDUCED…NOT INCREASED….. TAXES !!!!

    Just look a what happened before and after Reagan and the presidents that followed !!!!
    None of them increased…but all of them regularly cut taxes. The US economy, IRS, education,jobs, pensions, health, poverty… ALL profited from LOWER not HIGHER tax rates.

    Lula promised 10 millions jobs during his mandate, but so far….one year before the next election….only 3 millions jobs have been created. Can anyone imagine that 7 millions could be created…in a year or so ??????

    And even 3 millions is not that much…as you had the best 3 years growth….in decades !!!!!!

    Just think about it !!!!!!!! Even your growth was not YOUR growth. Because during that same 3 years most developing countries from South America or Asia had a higher growth rates than yours!!!! The developing nations, all profited, from the US stimulus when they lowered interets rates to a 50 years low….and accepted and so far still accept to have over US dollars 600 billions trade deficit !!!!

    With whom do you think you have the highest trade surplus ???? With the USA !
    With whom do you think that all developing countries have their biggest trade surplus ???
    Also with the USA !!!!!

    Finally…lets imagine…just one second….that the USA wont tolerate anymore…. such a trade deficit !!!!!

    Well….I think that all developing nations would suffer….the most ! Because you will export less not only to the USA, but also to many countries to whom you export but also that exports to the USA ! This is a snowball effect !!!!
    China is a very good example…they have a trade surplus of USD 170 billions…..just with the USA !!!!
    I tell you…that when America…will either have a slowdown or will refuse such a hiugh trade deficits….most developing countries will
    suffer a lot more than you think !!!!

    Cheers

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