A systemic-pragmatic analysis of special taxation on sugar-sweetened beverages

Between Mexican Experiences and Brazilian Expectations with the Creation of the Selective Tax under Constitutional Amendment 132/2023 of the Tax Reform

Abstract

This paper proposes to analyze the extrafiscal nature of taxation on sugar-sweetened beverages, drawing a correlation with the Mexican experience of the Special Tax on Production and Services (IEPS), specifically focusing on the use of an ad rem rate and raising questions about the effectiveness of this measure in reducing consumption and potentially mitigating health-related harms. It highlights the complexity involved in addressing all the factors inherent to the issue. With the recent institutionalization of the Selective Tax in Brazil, which is still under development, the study adopts Niklas Luhmann’s systems theory framework to examine how taxation operates as a structural coupling between the political and economic systems, while also generating irritations within the legal system. The legal system, through hetero-referential observations, becomes cognitively open to receiving information from environmental systems—particularly health and scientific systems—and processes such communications using its own structures and programs, while maintaining operational closure by conditionally structuring recursive observations. The central focus of this study is to analyze how information from the scientific system—which itself processes information from the health system—can be processed by the political system in making collective decisions. These decisions may, in turn, alter the legal system so that, through its internal structures (norms), it may—by means of taxation—provide communicative outputs that influence price formation with the aim of reducing the demand for products that generate negative externalities, as is arguably the case with sugar-sweetened beverages.