The cashback system in tax reform as a progressive instrument for socioeconomic development

Abstract

This article examines the Consumption Tax Reform from a developmentalist perspective, originally enshrined in the 1988 Constitution of the Federative Republic of Brazil (CRFB) and reflected in Constitutional Amendment (CA) No. 132/2023. The central focus of this research is the theoretical and practical analysis of how the cashback mechanism, established by the Reform, may address tax regressivity and, consequently, foster a fairer, more progressive, and equitable relationship between the fiscal state and the taxpayer. The methodological approach will adopt both legal-dogmatic and legal-theoretical methods. Initially, the article presents the broader context surrounding the Brazilian National Tax System (STN) and socioeconomic development. Subsequently, especially considering Piketty's theory, it seeks to understand how progressive tax treatment affects structural inequality and how CA No. 132/2023 incorporates fiscal justice and mitigates the regressivity of consumption taxation. Following that, the article demonstrates how a progressive tax model redistributes the benefits of globalization and brings the socioeconomic reality closer to the ideal of a Welfare State; it will also explore the proposal for establishing a Continental Tax within Latin America. Subsequently, the Tax Reform will be analyzed as an essential instrument of Economic Law. About the core aspect of this study, the focus will be on Mirrlees' theory, applicable to progressivity and resource redistribution, to assess the transformative impact of cashback on the economy.