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Brazil may eradicate extreme poverty by 2016

January 14th, 2010

Brazil may be able to eradicate extreme poverty by 2016, a study released on Tuesday by the Applied Economic Research Institute (Ipea) showed.

Brazil could reach a Gini index of 0.488, close to the 0.466 registered by the United States last year if Brazil’s current social equality programs work, said Ipea.

In order to achieve this, the country would have to reduce taxes for the low income population, which pays proportionally more than the richer citizens.

Brazilian families with an income of 1,020 reais (582 U.S. dollars) per month spend almost half of their earnings on taxes, while families with an income of 15,300 reais (8,742 dollars) or more spend only a quarter of their money on taxes, said Ipea.

To reduce poverty, Ipea said, the country needed to maintain a high growth rate and a low inflation rate, and to tilt its policies toward low incomers.

The Gini index measures inequality of income with 0 meaning complete equality. The world average is estimated at between 0.56 and 0.66.

Extreme poverty is defined by Ipea as income being no more than a quarter of the country’s minimum wage, or 128 reais (73 dollars)per month.

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