Brazil is seeking $100 billion in investments to revamp its water and sewage infrastructure, according to Correio Braziliense. The initiative aims to ensure comprehensive access to quality sanitation services across the nation, regardless of income levels.
Jader Filho, the Minister of Cities, emphasized the critical need for this investment: "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 lack access to treated water, and 90 million do not have sewage collection services. The government’s ambitious goal is to achieve universal access to potable water by 2033, targeting 99% coverage.
However, this drive for substantial investment coincides with concerns over potential tax increases within the sector. Recent tax reform measures approved by the lower house have raised alarms among industry stakeholders about possible tax hikes. "The tax reform framework approved recently by the lower house disregarded the importance of the sanitation sector, signaling an increase in tax rates," Percy Soares Neto, founder of water and waste consultancy Ikigai, told BNamericas.
Water companies currently 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 see these taxes rise 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.
