Buyers1

According to a salesman from India whom we met at a local Indian restaurant here in Sao Paulo, Brazil (and Sao Paulo, especially) is one of the most expensive cities in the world. We’ve heard similar remarks from others who travel more than we do, so I’m inclined to believe them.

Many items in Brazil cost two to four times what they cost in the United States. The unlocked iPhone I purchased in the U.S. for $700 would cost double that here, if even available. (Given that iPhones and other smartphones are the target of many street thefts, I suppose they are available, though on the black market.)

But it’s not only electronics that are outrageously priced. Basic necessities such as cribs, or diapers, or appliances cost multiple times more in Brazil than they do in the States. And yet, the shopping malls are generally packed with people on weekends, entire families walking with bags of purchases they’ve made in the extravagantly over-priced stores. How can they afford it?

The majority of people I meet here, Americans, Europeans, and Brazilians alike, save their purchases for the U.S. or Europe. Many Brazilians say it’s cheaper to buy a ticket to Orlando, Florida, and fly up there to purchase all their needs, than to buy here. Given that, it’s no wonder that American Airlines has a special 2-bag, 70-lb each, limit on luggage from the U.S. to Brazil (and vice-versa).

Buyers

Brazilians reported spent $2 billion abroad last year. Most fly to Orlando to make their purchases, though I understand Dallas-Fort Worth is pitching itself as a destination, as well. Who wouldn’t want a bigger chunk of that action?

Supposedly, seeking to prevent such shopping binges from getting out of control, the Brazilian federal police screen travelers upon return to Brazil, picking out people whose luggage appears to bulge with too many items. If it can be proved that Brazilians spent over a certain limit abroad, they are immediately forced to pay taxes on their purchases. This is supposedly a $500 purchase limit, but we’ve seen people in the airport pass through Customs with suitcases large enough to comfortably house a grandparent or twins.

Current plans are to allow $1,200 of tax-free purchases in Brazil’s airport duty-free shops, an increase from the current $500 limit.

Dufry

Gap and Apple are supposed to open stores here in Brazil in the near future, but I sincerely doubt that the prices will be as low here as in the U.S., primarily due to the stiff taxes imposed on imports.

One product that is cheaper here in Brazil than elsewhere are Havaianas, the popular footwear that have taken the U.S. by storm. We can get a pair here for $15 to $45, but they’re more expensive now in the States.

havaianas brasil

Much of the blame for the  high prices can be placed on a dysfunctional tax system that prioritizes consumption taxes, which are relatively easy to collect, over income taxes.

Food prices have risen significantly in our 16 months here, but we don’t know the reason for the increase. Is it for the basic foodstuffs, or because of taxes? A new federal law will require retailers to detail on receipts how much tax customers are being charged, which will be very interesting. For every $100 we spend on groceries, it’s likely we’re paying at least $25 in taxes. Now we’ll know for sure.

That knowledge won’t ease the pain, though. It’s likely only to increase the anger already directed at the government for gouging the people. Stay tuned.