FRIEDRICH-EBERT-STIFTUNG – INEQUALITY IN BRAZIL and Gomes(2024) have estimated potential tax revenues that would accrue to the Brazilian government, as well as potential distributional effects in the event this proposal is implemented for the top 0.2 per cent of the income distri­bution pyramid. They modeled various scenarios with differ­ent excise taxes, i. e. 2 per cent, 2.5 per cent and 3 per cent on wealth, with the revenue obtained corresponding to the difference between the excise tax and how much the quan­tile already pays in income taxes as a proportion of their wealth. The smaller amount would generate almost R$ 42 billion in taxes in a year, whereas the other two would pro­vide approximately R$ 60 billion and R$ 78 billion, respec­tively, in the same period. When one considers the strong regressivity of Brazil’s effective tax incidence on income when we look beyond the top 1 per cent in the distribution structure, it is apparent that the imposition of an excise tax greater than 2.5 per cent could reverse this pattern and re­turn to the progressive pattern observed up until the richest 1 per cent of individuals. GOVERNMENT TRANSFERS: PROGRESSIVE OVERALL, BUT WITH HETEROGENEOUS INDIVIDUAL EFFECTS Regarding the effects of government transfers on income inequality, Gomes et al.(2022) present some interesting ev­idence. Echoing an extensive literature(Soares et al., 2007; 2009; 2010; Barros et al., 2007; Silveira, 2010; Hoffmann, 2013; Silveira et al.; 2020; 2022), they show that, taken to­gether, government transfers are progressive, that is, they benefit the lower strata disproportionately, therefore reduc­ing inequality. For instance, they represent around 25 per cent of the total income of the lowest decile, less than 20 per cent of the income appropriated by the highest de­cile, and around 15 per cent of earnings by the top 1 per cent. Three types of monetary transfers are responsible for this result: the world-famous Bolsa Família, the Benefício de Prestação Continuada or BPC, which guarantees a monthly payment equivalent to a minimum wage for the elderly and disabled; and the public pension regime for retired formal workers, RGPS( Regime Geral de Previdência Social). TAX EVASION According to estimates by the National Union of National Treasury Attorneys(SINPROFAZ) 11 , between 1 January and 31 December, Brazil lost R$ 626.8 billion 12 in 2022 due to tax evasion, which amounts to 6.3 per cent of GDP in the same year. Thus, a significant share of tax revenues is lost to the Brazilian government budget every year, reducing its ca­pacity to provide public goods and services for the popula­tion. Tax evasion is related to the size of the“shadow econo­my” 13 . Medina and Schneider(2018) estimate that the Bra­zilian shadow economy amounts to 37.6 per cent of GDP (the average over 1991–2015). In comparative terms, the largest shadow economies are located in Zimbabwe (60.6 per cent) and Bolivia(62.3 per cent), while the small­est ones account for 8.9 per cent and 7.2 per cent of Aus­tria’s and Switzerland’s GDP, respectively. The average size for all 158 countries included in the sample is 31.9 per cent, which means that Brazil assumes an intermediate position on a global scale. In turn, Clemente et al.(2021) find that Brazil is one of the Latin American countries with the lowest probability of tax evasion: 18 per cent, in comparison to 68 per cent, 67 per cent, 48 per cent and 28 per cent for Argentina, Uruguay, Bolivia and Peru, respectively. Still, the likelihood of tax eva­sion in the case of Brazil is higher than for European coun­tries such as Germany(10 per cent), Denmark(11 per cent), France(11.7 per cent) and Finland(13 per cent). The authors argue that Latin American countries have a tax structure that favours tax evasion. Indeed, the Brazilian tax system is complex and not very transparent, so“the difficulty in mon­itoring and auditing heightens the opportunity for tax eva­sion”(Clemente et al., 2021, p. 11). Thus, a tax reform that simplifies the tax structure, such as a reform of indirect tax­es currently under discussion in the National Congress, could help mitigate this situation. On the other end of the spectrum, the public pension re­gime for retired public service workers( Regime Próprio de Previdência Social or RPPS) is regressive: it is a source of in­come overrepresented among the top 10 per cent, and es­pecially the top 1 per cent of the income distribution struc­ture. This regressivity is more pronounced within the demo­graphic groups of white women and black men, since top earners within these groups are usually public service work­ers. Last but not least, one important feature of government transfers is its pro-female nature across all income deciles, but especially for the top 9 per cent(excluding the top 1 per cent) of earners in each demographic group: these transfers (mainly because of the RPPS and the RGPS) account for 24 per cent and 22 per cent of the total income of black and white women, respectively, in comparison to 18 per cent of the total income of black and white men among the top 9 per cent(Gomes et al., 2022). 11 https://www.sinprofaz.org.br/tag/sonegometro/(Retrieved Septem­ber 30, 2023). 12 Around US$ 125.4 billion in September 2023. 13“[S]hadow economic activities may be defined as those economic activities and income earned that circumvent government regulation, taxation or observation(...); hence all productive economic activities that would generally be taxable were they reported to the state(tax) authorities”(Medina; Schneider, 2018, p. 5). 10