There are six main areas of the Brazilian laws that directly or indirectly encourage the deforestation of the Amazon by doing one or more of the following: increasing demand for farm, pasture, or ranch lands and thus destroying any possibilities for success for projects or programs that try to preserve the rainforest. These six areas are:
1. Taxes on agricultural income
2. Rules of land allocation
3. Land Taxes
4. Capital gains and commodity taxes
5. Regional and sectoral taxes
6. Provision for credit

Taxes on Agricultural Income
-laws almost completely (80%-90%) exempt agricultural income, creating a tax shelter for large corporations and ranches
-creates large demand for land by urban investors and corporations
-results in unequal ownership of land- large farms buy up smaller ones
-can choose between being taxed on 10% of agricultural income or cost of modern inputs or investments subtracted from gross agricultural income

Rules for Land Allocation
-corporate projects approved by SUDAM or the Grande Carajas program receive special preferences for land titling
-individuals most effective way of showing claim to land is by squatting--> direito de posse
        -recognized since 1850; squatter, or posseiro, who lives on public land and used it 'effectively' for one year and one day
         has right to over 100 hectares
        -if squatter uses land 'effectively' for five years, has right to obtain title
        -SAME GOES FOR SQUATTING ON PRIVATE LAND
-squatters in Grandes Carajas area, for example, get preference to obtain title for up to three times the area which he or she cleared of forest ----> GIVES PEOPLE AN INCENTIVE TO RAPIDLY DEFOREST LARGE AREAS
-in many areas, large corporations and large ranches are allocated most of land because they have means to build their own access roads into forest, while poorer farmers cannot
-Rondonia is one place where land is divided into small plots to prevent this--> WORLD BANK sponsors projects there
-clearing land dissuades squatters from invading land since they can't clear it themselves and lay claim

Land Taxes
-normally, the larger the land holdings, the more you are taxed on
-Estatuo de Terra provides for a progressive land tax
            -small farmers (less than 2 modulos) pay no land taxes
            -large farmers (more than 100 modulos) pay 3.5 % of unimproved value of land
-land tax can be reduced by 90% depending on intensity of land use and productivity of farm
-FOREST LAND IS CONSIDERED UNUSED -->farms w/ forest are taxed more; farms that clear forests are taxed less
-in settled areas, land taxes are strictly enforced
MAJOR CHANGES NEEDED
-lowering ceiling of land that can be allocated to single person to 100-200 hectares
    -eliminate large ranches
-make land ceiling on corporate holdings
-change definition of land use for the regularization process and forms of forest management

Taxes
Regional and Sectoral Taxes
-SUDAM, IBDF, Grande Carajas program can provide special tax incentives to single corporate enterprises
-many regions and sectors have special incentives that affect deforestation
-five classes of incentives
    -income tax holidays for up to 10 years(Grande Carajas only)
    -reinvestment tax credits used for modernization or expansion (limited to 50% of liabilities)
    -general tax credits used to set up, invest in, or participate in approved enterprises (25% of tax     liabilities)
    -tax credits for individuals up to 45% of investments into stocks of FIDAM, FINOR, FISET (6%)
    -exemption from import tariffs, export taxes, commodity taxes

Provisions for Credit
-to get access to subsidized credit, need legitimate land title or certificate of land occupancy->hard to get
-increase in credit subsidy results in increase of demand for titled land
-ranchers and large corporations are more likely to receive subsidized credit
    -SUDAM-approved ranchers and private farmers have subsidized credit available to them
-average small or poor farmer cannot get subsidized credit very easily
 

WORKS CITED
Binswager, Hans P. (1991) . Brazilian Policies that Encourage Deforestation in the Amazon. World Development Vol. 19
No. 7, pp. 821-829