View article

Despite raising an amount of tax equivalent to 35 percent of the country’s GDP and spending about seventy percent of that on social programs—a proportion close to the OECD average and well above the average in other Latin American countries—Brazil has not been able to significantly alleviate inequality and poverty. Income inequality remains one of the highest in the world and more than a fifth of the Brazilian population still lives on less than US $2.00 a day (UNDP 2005, 227).

Brazil is an exception to the observed international pattern, where higher tax burdens are generally associated with lower income inequality. Figure 8.1 shows that the Gini coefficient in the United Kingdom and Spain is lower than in Brazil despite a similar tax burden. On the other hand, countries with relatively similar degrees of inequality, such as Mexico and Chile, have much lower tax burdens. To an extent, the lower income inequality …