Impacts of a Tax Elimination on Consumption of Food and Agricultural Products in Brazil

The present paper has used a Computable General Equilibrium Model to analyze the impact of a tax eliminating policy at the final consumption of food and agricultural goods, which constitute the largest part of the consumption basket of lower income classes. The impact on government revenue was also evaluated by considering a transfer of income from higher income classes simulating a progressive income tax. The withdrawal of taxes shows a positive impact on the economic well-being of households in aggregate form, despite a fall in the government’s economic well-being. After triggering the transfer of resources from the higher income classes, the reestablishment of government accounts with a decrease in subtle well-being is highlighted, with an effective income redistribution policy.