Brazil is aiming to secure $100 billion in funding to upgrade its water and sewage systems. This initiative is designed to guarantee universal access to high-quality sanitation services throughout the country, irrespective of individuals’ income levels.
Jader Filho, the Minister of Cities, highlighted the urgent necessity for this funding: “It is critical and cannot be delayed to ensure that every Brazilian citizen, no matter where they are in the country and regardless of their financial capacity, has complete access to quality sanitation services.”
Currently, around 30 million of Brazil’s 200 million inhabitants lack access to treated water, while 90 million do not benefit from sewage collection services. The government’s ambitious objective is to achieve universal access to safe drinking water by 2033, aiming for 99% coverage.
However, this push for significant investment comes amid worries about possible tax increases in the sector. Recent tax reforms approved by the lower house have raised concerns among industry players about potential tax hikes.
“The recently approved tax reform framework by the lower house overlooked the sanitation sector’s importance, indicating a rise in tax rates,” stated Percy Soares Neto, founder of the consultancy Ikigai.
Water companies currently pay a 9.25% federal tax on PIS and Cofins but are exempt from state and municipal taxes like ICMS and ISS. Proposed modifications under Senate consideration could increase these taxes to 26.5%, in line with the new VAT system.
Since the establishment of a new regulatory framework in 2020, Brazil’s water industry has seen considerable private investment, moving away from state control. Current regulations mandate that municipalities must achieve complete water and sewage coverage by 2033.
Investment in this sector has consistently risen, with 22.5 billion reais (around $4 billion) invested in 2022, compared to 18.3 billion reais in 2021, according to the water concessionaires’ association Abcon. Projections for 2023 indicate that investments could hit 26.8 billion reais.
Recently, the São Paulo government successfully raised $2.7 billion through the sale of shares in the privatization of the water and sanitation firm Sabesp.
Source :Correio Braziliense
