Brazil is aiming to secure $100 billion in investments to overhaul its water and sewage infrastructure, according to Correio Braziliense. This significant initiative seeks to provide all citizens with access to high-quality sanitation services, irrespective of their income levels.
Minister of Cities Jader Filho highlighted the pressing need for these investments, stating, “It is urgent and unpostponable to ensure that the entire Brazilian population, in any part of the national territory and regardless of their ability to pay, has full access to quality sanitation services.”
Currently, about 30 million of Brazil’s 200 million citizens do not have access to treated water, and 90 million lack sewage collection services. The government aims to achieve universal access to potable water by 2033, with a target of 99% coverage.
However, this push for substantial investment coincides with concerns about potential tax increases within the sector. Recent tax reform measures approved by the lower house have raised alarms among industry stakeholders. Percy Soares Neto, founder of water and waste consultancy Ikigai, commented, “The tax reform framework approved recently by the lower house disregarded the importance of the sanitation sector, signaling an increase in tax rates.”
Currently, water companies face a 9.25% PIS and Cofins federal tax but are exempt from state and municipal taxes ICMS and ISS. Proposed changes under Senate review could increase these taxes to 26.5%, aligning with the new value-added tax (VAT) system.
Since the introduction of a new regulatory framework in 2020, Brazil’s water sector has attracted significant private investment, transitioning from state dominance. According to current regulations, municipalities must achieve full water and sewage coverage by 2033.
Investment in the sector has shown a steady increase, with 22.5 billion reais (approximately $4 billion) invested in 2022, up from 18.3 billion reais in 2021, as reported by the water concessionaires’ association Abcon. Estimates for 2023 suggest investments could reach 26.8 billion reais.
Last week, the government of São Paulo successfully raised $2.7 billion through the sale of shares in the privatization of the water and sanitation company Sabesp.