The Brazilian industry of cosmetics, fragrances and personal care products finished 2015 with an 8% fall in sales achieving net revenues of R$ 42.6 billion.
According to the Brazilian Association of the Cosmetic, Perfumery and Toiletry Industry (ABIHPEC), the increased tax burden - along with currency effects and the current political and economic turmoil - has led the country to lose positions in the global marketplace. Brazil was overtaken by Japan as the world’s third largest market .
Negative impact of tax increases
ABIHPEC’s president, João Carlos Basilio, says the industry’s negative trend is directly linked to tax hikes imposed by the government to close the budget gap. “This has actually created the opposite effect by driving down sales and, as a result, reducing tax revenues,” he says.
Products that are regarded as essential to consumer health and wellbeing were saddled with increased taxes in most Brazilian states. "In the sate of Paraná, for example, the tax burden on sunscreens increased by 108%. Minas Gerais saw a 125% rise on toothpaste taxes and another 50% on basic items such as,” says Basilio.
ABIHPEC also fears that the increased tax burden fuels illicit trade and smuggled goods
Basilio believes that the water crisis has also had a major impact on some categories, namely bath products by triggering a change in consumer and personal care habits for Brazilians, resulting in reduced time and frequency of baths and showers.
For more information, read BrazilBeautyNews.com