Constitutional Amendment 132 of 2023 introduced into the Brazilian Tax System the so-called selective tax, a levy that official rhetoric describes as a behavioral induction mechanism, aimed at discouraging goods and services considered harmful to health and the environment. The premise seems intuitive: the higher the tax burden, the lower the consumption.
But such shallow reasoning cannot be adopted without reflecting on the assumptions that legitimize the measure. After all, who defines what is harmful? On the basis of what criteria? Moreover: even if it were possible to objectively identify such goods, would taxation actually be effective in reducing consumption? If the answer is yes, would such reduction be socially and economically desirable in every case? These are questions that cannot be ignored, but which, curiously, the constitutional legislator chose to leave open.
In this sense, the history of the Brazilian Tax System teaches that, under the veneer of extrafiscal purposes, revenue-raising motivations almost always lie hidden. The notion of “harmfulness,” elevated to a criterion for incidence, is broad and porous, allowing political convenience to masquerade as legislative technique.
The moralizing discourse underpinning the measure is not new: cigarettes, alcoholic beverages, fossil fuels, and vehicles are traditional targets of this logic. The novelty lies, however, in the incorporation of sectors such as betting pools and online gaming—an industry that moves billions and, for that very reason, attracts the greed of a State that never tires of inventing noble justifications for taxation.
Indeed, Complementary Law 214 of 2025 materializes the competence mentioned above, establishing the exhaustive list of products and services subject to the selective tax. The problem, as foreshadowed, is the malleability of the notion of harmfulness—an indeterminate legal concept that lends itself to political choices disguised as technical criteria.
The case of trucks is symptomatic: although highly polluting, they were excluded from the scope of the tax on the grounds of national logistical dependence. This is not a health or environmental criterion, but rather one of economic convenience. This Brazilian-style selectivity reveals the risk of creating an erratic tax, whose incidence is not anchored in consistent principles but in contingent political arrangements.
The critique becomes even more evident when one observes the inclusion of betting pools and fantasy sports (art. 409, §1, VII)—which encompasses online games and virtual betting—within the spectrum of selective taxation.
Unlike cigarettes or alcoholic beverages, whose consumption involves the acquisition of a fixed-price, tangible product, betting operates under a different logic. When someone buys a pack of cigarettes, they pay a price, receive the product, and if the price goes up, they may be discouraged from consuming.
In gaming, there is no such direct exchange. The bettor deposits money into a platform and, from then on, enters a spiral of successive bets, where wins and losses fuel further betting. There is no clear perception of price, nor any immediate economic barrier. The demand elasticity that justifies classic selectivity simply does not apply here.
In this sense, the alleged extrafiscal function loses substance. Taxation of online betting does not in itself reduce gambling participation. Behavioral addiction does not respond to higher tax burdens in the same way that a consumer responds to a tangible good becoming more expensive. In practice, what emerges is a revenue-raising mechanism disguised as social protection.
Acknowledging that gambling can cause addiction and bring serious harm to families is legitimate. But ignoring that this same sector creates jobs, sponsors cultural activities, and finances a growing industry is equally selective.
The issue is not being against the taxation of gaming, but recognizing that the function of mere state financing is not the same as the extrafiscal function that the Constitution assigned to the selective tax.
This conceptual confusion is not new in our system. The recent use of the IOF (Tax on Financial Operations) as a revenue-raising instrument exposed the government’s temptation to repurpose taxes originally designed for specific ends. The IOF, conceived as a regulatory tax, has often been transformed into a short-term fiscal adjustment valve, detached from its original logic.
The same risk surrounds the selective tax: a levy created with the promise of inducing behavior may turn into yet another revenue-raising cog, reinforcing the regressive nature and legal uncertainty of the system.
The problem, therefore, is not taxation itself, but the extrafiscal label attached to it. If the goal is to raise revenue, let it be said openly, and let appropriate tax instruments be used for that purpose. By its constitutional design, the selective tax should have a regulatory vocation. Using it as a mere source of revenue distorts its nature and deepens the system’s chronic legal insecurity.
The final metaphor sums up the picture. The Revenue Service’s lion, always hungry for new revenue sources, has found in the “little tiger” of digital platforms a seductive adversary, capable of mobilizing crowds and moving billions.
In the midst of this clash, the “tortoise” of legislative technique advances slowly but breaks the bank, carrying the mark of regulatory improvisation that insists on turning regulatory tools into revenue-raising machines. In a land of tortoises, lions, and little tigers, the die seems cast: while the predators fight for the spotlight, it is the taxpayer who continues to foot the bill.
Guilherme Chambarelli
Business Lawyer, focused on the Financial and Capital Markets, the Digital Economy, and Family Enterprises. Partner at Chambarelli Advogados
