Yes and no. Informal work is generally done by poorer folks. While they should be paying taxes, the Brazilian income tax system penalizes low income earners the most. It’s not a progressive tax system like you find in Europe or the US. When you go to the next tax “band”, it’s not just the excess income that gets taxed at the new band. it’s all of your income.

For example, say there’s no income tax on incomes below 30k a year, and the first tax bracket is 20%. The moment your earnings go to 31k you’ll net less money than someone making 30k because the 20% is applied to all 31k.

This obviously has a pretty negative effect on low income families.