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.’ “