The long queues that formed outside the Forever 21 department store at its recent opening in Brazil show the problem: brazilian want to pay cheaper for their products. It is unclear if the very attractive prices that the retailer is doing in the Brazilian market will sustain themselves, but the arrival of the brand gave rise to a dispute. Why do brazilians pay so much for clothes and other items?
This infographic from O Dia details the tax burden on clothes in Brazil.
According to Veja, Forever 21 is selling t-shirts for R$ 8,90(around 4 U$D) and Jeans pants for 34,90(around 15 U$D).
Last week, Banco BTG Pactual announced the “Zara index” that measured the price of a basket of 14 products sold by the Spanish retailer in 22 countries. Brazil was the most expensive one. In total, the package came to R$ 2,812.56 (US$ 1,280), 21% above that in the United States (R$ 2,315.65) and 41.6% higher than in Spain (R$ 1,641,67).
Experts point to taxes to explain the problem. According to the Brazilian Institute of Tax Planning (BIPT), the customer paying R$ 100 on a pair of jeans would pay R$ 38.53 only in taxes. For clothes, in general, the average is 34.67%.
Other popular items among the female audience, such as makeup and jewelry, also suffer higher taxation. To get to the final product the industry goes through fiber, yarn, fabric, and it accumulates a cascade of very aggressive taxes. The textile sector carries a greater burden than the steel industry, for example, because the production chain is longer.
Brazil is also famous for having the most expensive Iphone, the 5th most expensive Big Mac in the world, the most expensive Playstation, the most expensive cars, etc…