Lupa no Imposto: the tax inside the price

Context

Indirect taxes in Brazil are embedded in the shelf price. A shopper sees one number and has no way to tell how much of it is tax, which makes the size of the burden invisible at the exact moment it is paid.

Problem

Making the embedded tax visible means holding a rate for every product and service in the country (by NCM code for goods, and by NBS and the items of Complementary Law 116 for services) and turning that base into an answer a shopper or a business can get in one step.

Approach

The IBPT supplied the rate base for every NCM, NBS and LC 116 item, and Lupa no Imposto turned it into a public service: what a given product would cost without the indirect taxes embedded in its price. It was built for citizens and for companies at the same time, which is what later let the same base feed point-of-sale systems rather than only answer one shopper at a time.

Non-obvious decisions

• Answer with a price, not with a rate. A percentage is an argument; a currency amount next to the price on the shelf is a fact the shopper can act on.
• Publish the rate base as an input other systems could consume, not only as a page. That is what made the jump from a consumer service to a compliance tool possible: the same data later served De Olho no Imposto, conceived by the IBPT with the ACSP.
• Aim at legislation rather than at traffic. Transparency that depends on a citizen looking for it reaches the people already convinced; transparency written into the receipt reaches everyone who buys anything.

Outcome

The project was one of the drivers of Brazilian Federal Law 12,741/2012, the tax transparency law that obliges every establishment to state the taxes on the receipt, and its rate base fed De Olho no Imposto, the national rollout of that obligation.