Question

explain in your own 200 words

if Coca-cola opens a bottling plan un Brasil, what effect would it have on that country’s Gini co-efficient??

Answer 1

Gini co-efficient

It is a statistical measure used to describe the extent of inequality in the distribution of wealth (or) income among the residents of a particular nation's economy.

The basic corporate tax rate in Brazil is 15 %.If the income crosses BRL 240000 then it again attracts an additional tax rate of 10 % and also 9% social contribution on pre-tax profits.

We know that Coca-Cola is an American company and as it is among the top 5 largest companies across the globe,it has a huge market even in the Brazil.So,it is assumed that it's revenue will be well above the level of BRL 240,000.So,the company will be paying 3 types of taxes to the Brazil Government

This means a huge revenue to the Government of Brazil which means the govt.can utilize that additional revenue received in the form of taxes to fund it's welfare programs which will ultimately result in the reduction in income inequality which means the Gini-Coefficient of Brazil will reduce.

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