the IBC to pay out US$1.3 billion and US$2.0 billion in avisos in 1980 and 1981, respectively.
Together, the amounts rebated significantly exceeded the gross export tax revenue collected
during this period. Since coffee quotas had been reimposed in October 1980, Brazil effectively
found itself implementing a net export subsidy when exports were quota constrained.
A coffee quota remained in effect through July 1989, except for a brief period in
1986/87.17 Throughout this period, Brazil maintained a large export tax rebate of the initial type.
The early 1980s are the period when major rent transfers appear to have taken place. Brazil paid
out large amounts of avisos, a coffee quota was in force and the export tax did not constrain
exports.
The Effect of Export Tax Rebates on Brazil’s Coffee Export Price. Because different
policies were followed in different periods when export tax rebates were utilized, it seemed
likely that the effect of the export tax rebates should have differed from one subperiod to
another. I identified three subperiods for comparison: 1965-71, 1972-79, and 1980-88. During
1965-71, an export quota was in effect, the export tax was greater than the unit quota rent—thus
constraining exports to the quota market, and export tax rebates were paid to only a few large
importers in exchange for an agreement by these importers to purchase additional coffee. Delfim
Netto’s theory assumed that the export tax rebate would reduce the constraining export tax,
allowing a profitable export expansion with no significant effect on the export price (See Figure
2). However, if the export tax rebate for the favored importers was set too high, it could have
induced importers to increase purchasers of Brazilian coffee beyond the quota limit, causing an
increase in the nominal export price.
During 1980-88, an export quota was in place, but the export tax was smaller than the
17 Jorio Dauster was appointed President of the IBC in January 1987. He says he was unaware that avisos were
causing income transfers to foreign importers, but quickly reduced their use because he thought they were
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