The first decade of the 2000s held great success for Brazil, with the total poverty rate falling from 41.7% to 17.7% between 2003 and 2014. However, since then the country’s reduction in poverty has come to a standstill. By 2019, the poverty rate had risen to 19.4%, and following this, the COVID-19 pandemic caused Brazil’s economy to suffer, with the country’s GDP per capita falling to a new all-time record of 4.7%.
Extreme levels of inequality in Brazil stand in the way of further economic development, with the country’s richest six men owning as much wealth as the poorest 50% of the population. Furthermore, the World Bank estimates that up to 3.6 million people in Brazil could fall back below the poverty line in 2023, signaling the need for the government to focus on reducing the wealth gap to reduce the number of people living in poverty or at risk of falling below the poverty line in both the short and long term.
Reforming the Tax System
The Organisation for Economic Co-Operation and Development (OECD) recommends that Brazil’s government reforms the tax collection methods. Currently, Brazil collects a large amount of its taxes indirectly. If direct taxes collected a larger proportion of the country’s total taxes, including income taxes for individuals and businesses, it could reduce the proportionate burden of taxes on the poor and the government could instead raise a lot more money from the wealthy individuals and businesses. This money could then be more equally distributed throughout the country’s population via social spending targeting improving the lives of those living in poverty.
So far, there has been little progress in many aspects of the tax system, but in December 2022, there was a release of Provisional Measure No.1152. If approved, Provisional Measure No.1152 could change the rules on Transfer Pricing for corporations and also limit tax deductions available for spending on royalties such as patents and trademarks. Whilst this law will solely focus on changing how corporations pay their taxes, and may not directly impact individuals, it is a notable start and could be vital for reducing inequality in Brazil by making it more difficult for businesses to avoid paying taxes.
Ensuring Fair Access to Equal Education
According to the OECD, increasing the opportunities for and quality of early childhood education is another method for reducing inequality in Brazil. High-quality and consistent education from a young age is essential for increasing job opportunities for future generations. It also increases the likelihood of young adults obtaining higher-paid jobs which can break generational cycles of poverty. Removing barriers to disadvantaged students would enable equal access to education for all, as currently there is a large gap in grades between students who can pay to attend private schools compared to those who attend public schools.
There is a clear lack of investment in public schools from Brazil’s government, which is creating significant disparities in education levels between wealthier and poorer states; in 2015, 33% of young adults had received tertiary education in the Distrito Federal (DF), the capital state of Brazil, compared to just 8% of young adults in Maranhão, a poor state located in the northeast of the country, according to Social Protection.
Since the COVID-19 pandemic, during which the provision and quality of education in schools suffered significantly and inequalities between regions widened, the World Bank has delivered a loan of $250 million as part of the Recovering Learning Losses from the COVID-19 Pandemic in Brazil program. The main aim of the project is to address the increased school dropout rates as a result of the pandemic. And the strategy involves implementing precautionary measures and identifying students that are at high risk of dropping out. Improving educational resources in public schools is another key aim, which will help reduce the discrepancies in schooling between different regions of Brazil while ensuring that future disease outbreaks don’t disrupt education.
More Investment in Public Health Care
Despite a universal public health care system that is available to all legally living in Brazil, the lack of adequate funding has created long waiting times and difficulty with obtaining appropriate care in many cases. In turn, this causes inequalities in health care between those who can afford private health care and those who cannot. Providing the means for good health throughout the population represents a vital step in decreasing the higher prevalence of non-communicable diseases which are evident amongst the majority of Brazil’s population who cannot afford to pay for subsidiary private health insurance. A healthier population goes hand in hand with faster economic growth and a greater GDP per capita.
UNICEF’s 2022 Country Office Annual Report for Brazil highlighted some specific issues in health care amongst children and adolescents, with a clear trend in a reduction of routine vaccinations and an increase in the number of underweight children by more than 50% between March 2020 and November 2021. Additionally, a UNICEF survey revealed that approximately 50% of 7,700 participating adolescents and young people thought they required mental health support yet did not know how to access it.
Since these findings, the organization has launched the Papei campaign to encourage breastfeeding and nutritious diets for children, and over 2,500 professionals were newly trained on the importance of healthy eating. Additionally, UNICEF assisted the Immunization Society of Brazil to train more than 38,000 health professionals to increase the provision of vaccinations.
Prosperity for All
To achieve long-term and sustainable economic growth and development, ongoing trends suggest that Brazil has to overcome the current vast discrepancies which threaten to undo the progress made so far. As things stand, organizations such as the World Bank and UNICEF continue working hard to implement positive changes across the country and ensure the alleviation of inequality in Brazil.
– Hannah Naylor