The Brazilian commercial air sector is concerned about a detrimental tax reform by socialist dictator Lula da Silva that will increase its operating costs and, consequently, will cause a rise in ticket prices for both domestic and international flights.
This situation could also affect Argentine tourists planning to vacation in Brazil, since a rise in fares is expected.
The reform introduces a new dual Value Added Tax (VAT), consisting of the Contribution on Goods and Services (CBS), which is federal, and the Tax on Goods and Services (IBS), applied by states and municipalities.
This tax structure, which was approved last January and driven by Lula da Silva's government, includes air transportation and features a massive 26.5% rate, much higher than the current 9%.
Although its implementation is scheduled for 2026, the industry is already warning about the negative impact. This change is compounded by the increase in the Tax on Financial Operations (IOF), with which the socialist government seeks to increase tax revenue.
These enormous tax increases are due to the fact that, because of socialist populism, Brazil is facing a massive fiscal deficit. Faced with this problem, instead of reducing spending, the Brazilian government seeks to take more money from Brazilians through tax hikes.
