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LatinNews Daily - 16 February 2021

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In brief: Income redistribution could increase Brazil’s GDP, study shows

* Researchers from the centre on macroeconomics of inequality at Brazil’s Universidade de São Paulo (Made-USP) have published a report outlining how increasing taxation on Brazil’s richest 1% to allow for direct transfers to the country’s poorest 30% could help with the country's economic recovery. The Made-USP’s study explores the possibility of implementing fiscally neutral social protection programmes as a way of reducing inequalities in Brazil. Noting that the poorest 30% spend 90% of their income on consumption, compared with 24% for the richest 1%, the study outlines how direct transfers to poorer households (in the same vein as the emergency basic income that was distributed last year in the context of the coronavirus [Covid-19] pandemic) help spur consumption and economic growth. A monthly transfer of R$125 (US$23.3) to the poorest 30%, funded by taxes on the richest 1%, could have a positive impact of 2.4% on GDP, the study found. The study does not explore what kind of taxes could be raised to this end, but in an interview with BBC Brasil, one of the authors, Laura Carvalho, notes that this could be done by merely removing tax exemptions on capital.