Single Tax Rate versus the Ability to Pay Principle

Challenges for a Tax Reform of Consumption Taxation in Brazil

Abstract

This work aims to confront the possibility of a tax reform adopting a single and uniform rate for taxation on consumption and the principle of ability to pay. After describing the tax reform proposal (PEC 45), analyzing the ability to pay principle from a Brazilian dogmatic perspective, and comparing it with the New Zealand tax on goods and services, the conclusion was reached that the proposal is inadequate. The ability to pay prescribed by the Constitution, especially in the dimension of preservation of the vital minimum and considering the constitutional objective of reducing inequalities, prevents the insertion in the country of taxation on consumption, with a single and standard rate for all goods and services.