SAO PAOLO LETTER:Counting the cost of beauty procedures as a medical expense is seen by many as unfair, writes TOM HENNIGAN
IN A happy decision for the hundreds of thousands of Brazilian taxpayers who undergo plastic surgery every year, the country’s authorities have declared that procedures such as liposuction, face-lifts and buttock augmentations are now tax deductible.
So anyone who last year had, say, fat from their own thighs re-injected into their lips could deduct the full cost of the procedure when filing their annual income tax last month, claiming it as a medical expense. Previously the tax man only considered reconstructive plastic surgery – associated with victims of car crashes and severe burns – as a deductible medical expense.
And in a move that made filing ahead of last Friday’s deadline more time-consuming but less financially onerous for some, anyone with receipts for boob-jobs or pectoral resculpting and the like since 2004 could claim those costs back as well.
In making this year’s change, the federal government’s revenue service decided to make it retroactive to cover all plastic surgeries during the last five years. The move is no big loss for the government’s bean counters. Though Brazil’s plastic surgery market is worth €1.3 billion annually, this is small change compared to Brazil’s gargantuan tax haul, which this year is estimated to top €280 billion.
Even so, it is a gracious gesture to those Brazilians who went under the plastic surgeon’s knife 864,000 times last year, in a fondness for beautification second only to the United States, the world’s leading plastic surgery nation. The cult of the body beautiful is strong in Brazil and its citizens are far more open about their pursuit of corporeal perfection than in Ireland where, until recently, plastic surgery was something that happened abroad in societies with looser morals than our own.
Even so, the new change in the tax law has not been universally welcomed. Groups representing the country’s deaf community are outraged that while they can now claim back any money they spend on having their ears pinned back, the hearing aids they need are not considered tax-deductible.
This is, of course, insultingly unfair but then Brazil’s tax system is by definition unfair. In one of the world’s most unequal societies, poorer people pay a far larger percentage of their income in taxes than richer people. The government raises most of its revenue from taxes on consumption – food, clothing, household goods, utility bills – while there is less tax on income from savings, which only the better-off tend to have.
It is, say economists, a deeply regressive system that has not changed much under the country’s first left-wing president, Luiz Inácio Lula da Silva.
Lula has increased the amount of social assistance that the government provides to the poorest Brazilians. But the amount spent on his flagship social programme – Bolsa Família (the family purse) – is just a fraction of what the government pays in interest on its large debt, most of which is held by rich Brazilians.
Lula didn’t run up the debt, but in seven years he made little effort to see that the burden of serving it shifted from the backs of the poor to those better able to do so.
The system is riddled with such unfairness, made worse by the fact that, considering how much money the government raises, its provision of public services – on which the poor rely more – is shockingly shoddy. A visit to a public hospital or primary school will quickly make this clear.
But because most poor Brazilians do not pay income tax, they often do not realise just how much they are handing over to the government every time they go to the shops. Tax reform groups have sought to have every receipt include the amount of tax paid, as happens in the US, a move the government has resisted. Reformers believe once poorer Brazilians realise just how much of their money goes on taxes, they will start to demand better public services.
“In Brazil around 36 per cent of GDP is gathered by the government in taxes. This is almost at European levels of taxation but, in return, citizens get almost African levels of public services,” says Marcel Solimeo, an economist with the São Paulo Commercial Association, which campaigns for tax reform.
One part of the association’s campaign to educate Brazilians on just how much tax they pay is the tax-o-meter in the centre of São Paulo which calculates the amount of money gathered by the federal government each year.
In the time it has taken to write this article, the total has risen by about €100 million though, given that the numbers are whirring so quickly, it is impossible to give an exact figure.