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Pix is a great system and I definitely appreciate what our central bank has done. But what I don’t see people talk about are the other motivations (other than

Pix is a great system and I definitely appreciate what our central bank has done. But what I don’t see people talk about are the other motivations (other than no fees compared to credit cards) The last number I remember is that around 30MM Brazilians did not have bank accounts. There’s a large amount of “informal” work that happens in the country where people just get paid in cash. Pix is an alternative to that. It incentivises people to get a bank account. My tin-foil hat alter-ego can’t help but think that this helps the central bank have more oversight of where the money is going. And the central bank does share data with our “IRS”. That’s probably a good way to find people that should’ve been paying taxes and aren’t.

dotcoma 3y ago
That's great, isn't it ?
- _trackno5 3y ago
  Yes and no. Informal work is generally done by poorer folks. While they should be paying taxes, the Brazilian income tax system penalizes low income earners the most. It’s not a progressive tax system like you find in Europe or the US. When you go to the next tax “band”, it’s not just the excess income that gets taxed at the new band. it’s all of your income. For example, say there’s no income tax on incomes below 30k a year, and the first tax bracket is 20%. The moment your earnings go to 31k you’ll net less money than someone making 30k because the 20% is applied to all 31k. This obviously has a pretty negative effect on low income families.
  - aardshark 3y ago
    That seems monumentally stupid.
    - _trackno5 3y ago
      Oh it doesn’t seem stupid, it totally is. I still remember the surprise when I got my first salary raise and it bumped me from the 20% bracket to the 27.5% bracket and realized I was making less money. It took me another raise to break even.
      - rbanffy 3y ago
        As far as I remember (I used to be Brazilian) the tax is applied to the difference, so 20% is discounted from the maximum for the 20% bracket, and 27.5% (and, boy, I wish I only paid 27.5% tax here) is applied to the difference. Or am I misremembering? Maybe it's taken from the payslip, but returned with the yearly adjustment (which could make sense)
        SPascareli13 3y ago
        It is only in the difference between the brackets, technically you should never make less money by going into a higher bracket, just less then you expected.
        _trackno5 3y ago
        I haven’t lived in Brazil for 10 years, so maybe it’s different from what I remember. You might get the difference back when you filed taxes? I’m pretty sure my payslips discounted 27.5% though. And yeah, I also miss 27.5% tax. Ireland’s 52% marginal tax rate makes me sad every time.
        cassianoleal 3y ago
        It was always progressive. A lot of people think it isn't and I have no idea where that came from. You probably misinterpreted your _holerites_ back then.
        rbanffy 3y ago
        > And yeah, I also miss 27.5% tax. Ireland’s 52% marginal tax rate makes me sad every time. OTOH, we don't have to walk through someone's living room when going to work, or buy candy from kids on traffic lights. Equality has a price I'm more than happy to pay. I still remember how rare a sight kids selling candy on traffic lights was in the mid 2000's and it crushes my soul to see that again when I visit my family down there.
      - fmobus 3y ago
        Brazilian here: you are probably misremembering it, or there was some other kind of deduction happening in your payslip. And I say this with confidence, because Brazilian tax brackets work progressively, and have worked like that since always, just like every other sane country out there.
    - rpgbr 3y ago
      Yes, because it’s monumentally wrong. See my comment above.
  - srsilveira 3y ago
    In Brazil you would only be taxed over the 30k. First 30k tax free. 1k 20% tax. https://www.gov.br/receitafederal/pt-br/assuntos/meu-imposto-de-renda/tabelas/2023 https://www.gov.br/receitafederal/pt-br/assuntos/meu-imposto...
    - _trackno5 3y ago
      oh nice, so they passed these new brackets in this year’s tax reform? I stand corrected, thanks for. the info!
      - srsilveira 3y ago
        No. It's lime this for a long time. https://www.gov.br/receitafederal/pt-br/assuntos/meu-imposto-de-renda/tabelas/anteriores https://www.gov.br/receitafederal/pt-br/assuntos/meu-imposto... https://www.epcontabil.com.br/blog/tabela-do-irpf-de-1994-a-2020/ https://www.epcontabil.com.br/blog/tabela-do-irpf-de-1994-a-...
  - rpgbr 3y ago
    You’re misinformed. Brazilian income tax is progressive. In your example, 20% tax would be applied only to the 1k of 31k. Please stop spreading misinformation.
    - _trackno5 3y ago
      Thanks for the info!
glimshe 3y ago
Keep your tin-foil, it's not a conspiracy. Despite the successful system, Brazil has a tradition of charging taxes on every financial transaction, including money transfers. This system makes this type of tax incredibly easy, and such tax has been discussed multiple times. Also, a consolidated report (no information on individual transactions) gets sent to the Brazilian IRS just like the US does with stocks and mutual funds sales.

dotcoma 3y ago

That's great, isn't it ?

_trackno5 3y ago
Yes and no. Informal work is generally done by poorer folks. While they should be paying taxes, the Brazilian income tax system penalizes low income earners the most. It’s not a progressive tax system like you find in Europe or the US. When you go to the next tax “band”, it’s not just the excess income that gets taxed at the new band. it’s all of your income. For example, say there’s no income tax on incomes below 30k a year, and the first tax bracket is 20%. The moment your earnings go to 31k you’ll net less money than someone making 30k because the 20% is applied to all 31k. This obviously has a pretty negative effect on low income families.
- aardshark 3y ago
  That seems monumentally stupid.
  - _trackno5 3y ago
    Oh it doesn’t seem stupid, it totally is. I still remember the surprise when I got my first salary raise and it bumped me from the 20% bracket to the 27.5% bracket and realized I was making less money. It took me another raise to break even.
    - rbanffy 3y ago
      As far as I remember (I used to be Brazilian) the tax is applied to the difference, so 20% is discounted from the maximum for the 20% bracket, and 27.5% (and, boy, I wish I only paid 27.5% tax here) is applied to the difference. Or am I misremembering? Maybe it's taken from the payslip, but returned with the yearly adjustment (which could make sense)
      - SPascareli13 3y ago
        It is only in the difference between the brackets, technically you should never make less money by going into a higher bracket, just less then you expected.
      - _trackno5 3y ago
        I haven’t lived in Brazil for 10 years, so maybe it’s different from what I remember. You might get the difference back when you filed taxes? I’m pretty sure my payslips discounted 27.5% though. And yeah, I also miss 27.5% tax. Ireland’s 52% marginal tax rate makes me sad every time.
        cassianoleal 3y ago
        It was always progressive. A lot of people think it isn't and I have no idea where that came from. You probably misinterpreted your _holerites_ back then.
        rbanffy 3y ago
        > And yeah, I also miss 27.5% tax. Ireland’s 52% marginal tax rate makes me sad every time. OTOH, we don't have to walk through someone's living room when going to work, or buy candy from kids on traffic lights. Equality has a price I'm more than happy to pay. I still remember how rare a sight kids selling candy on traffic lights was in the mid 2000's and it crushes my soul to see that again when I visit my family down there.
    - fmobus 3y ago
      Brazilian here: you are probably misremembering it, or there was some other kind of deduction happening in your payslip. And I say this with confidence, because Brazilian tax brackets work progressively, and have worked like that since always, just like every other sane country out there.
  - rpgbr 3y ago
    Yes, because it’s monumentally wrong. See my comment above.
- srsilveira 3y ago
  In Brazil you would only be taxed over the 30k. First 30k tax free. 1k 20% tax. https://www.gov.br/receitafederal/pt-br/assuntos/meu-imposto-de-renda/tabelas/2023 https://www.gov.br/receitafederal/pt-br/assuntos/meu-imposto...
  - _trackno5 3y ago
    oh nice, so they passed these new brackets in this year’s tax reform? I stand corrected, thanks for. the info!
    - srsilveira 3y ago
      No. It's lime this for a long time. https://www.gov.br/receitafederal/pt-br/assuntos/meu-imposto-de-renda/tabelas/anteriores https://www.gov.br/receitafederal/pt-br/assuntos/meu-imposto... https://www.epcontabil.com.br/blog/tabela-do-irpf-de-1994-a-2020/ https://www.epcontabil.com.br/blog/tabela-do-irpf-de-1994-a-...
- rpgbr 3y ago
  You’re misinformed. Brazilian income tax is progressive. In your example, 20% tax would be applied only to the 1k of 31k. Please stop spreading misinformation.
  - _trackno5 3y ago
    Thanks for the info!

glimshe 3y ago

Keep your tin-foil, it's not a conspiracy. Despite the successful system, Brazil has a tradition of charging taxes on every financial transaction, including money transfers. This system makes this type of tax incredibly easy, and such tax has been discussed multiple times. Also, a consolidated report (no information on individual transactions) gets sent to the Brazilian IRS just like the US does with stocks and mutual funds sales.