In past decades, the Brazilian tax burden has been the subject of discussion and analysis in
the academic, political and social arena. In 2008, Brazilian tax burden reached the tax level
from OECD countries, although the social issue in Brazil is in lower level than those
countries. The current Brazilian tax system takes the features from the National Tax
Codification of 1966, which indicates the need to reform the tax system in order to update
it and make it less bureaucratic, more efficient and progressive. The purpose of this paper
is to bring together the areas of taxation, law and environment, in order to identify and
quantify the tax burden on the production of charcoal and pig iron. Charcoal represents
35% of the national forest producion, three quarters of this percentage is for the steel
market, especially for the production of pig iron. The State of Minas Gerais is responsible
for 64% of Brazil’s charcoal production and it is the largest producer of charcoal and pig
iron in the country. The database was supplied by Fazenda Bom Sucesso, from the
Votorantim Group. There was able to obtain the production of pig iron by dividing the
volume in cubic meters of charcoal by 2.8 for each ton of pig iron produced. Fourteen kind
of taxes were analyzed: ECRRA, TF, ICMS, IPI, COFINS, PIS, IRPJ, CSLL, ITR, IPTU,
TCFA, TFAMG, INSS and FGTS. The tax burden for the production of charcoal was
9.76%, and for pig iron was up to 30.70%. There was no municipal tax for charcoal. There
was only one municipal tax for pig iron: IPTU. State taxes accounted for arround 10% of
the tax burden of the charcoal production. The payroll expenditure and tax forest accounts
for 1.63% and 0.97% from the charcoal production. Payroll expenditure reached 0.94%
from the pig iron production, which indicates that the forest sector is much more dependent
on the labor factor than the steel one which depends more on technological factor. COFINS
is responsible for the largest tax burden for charcoal: 3%, which confirms the Brazilian tax
system is very non progressive. In Minas Gerais, Brazilian tax on goods and services
(ICMS) is deferred, the pig iron buyer has the obligation to collect this tax. This means the
steel company accounts for the total burden of ICMS. For the pig iron production, the
largest taxes are: IPI and ICMS. Municipal tax, IPTU, is only 0.02% from the pig iron
production, confirming the low participation of municipal tax burden in Brazil. The tax
system is very bureaucratic and non efficient, the proof is environmental taxes TCFA and
TFMAG whose revenues do not represent any aspect of tax collection, and the amounts
charged are less compared to charcoal and pig iron production, which can not act with the
duty of inhibiting the exploration of natural resources. The Brazilian tax system is non
progressive, with a high tax burden in case for pig iron, regardless of the need for a
restructuring of the tax system, with implications on the Brazilian’s federal pact.
