The tax burden continued to rise


Source: O Estado de S. Paulo, 04/01/2009

The tax burden increased again in 2008, from 34,79% of gross domestic product (GDP), in 2007, by government accounts, to 35,49% of GDP, according to Amir Khair, PT economist and former secretary of Finance of the São Paulo City Hall, under the Erundina administration. The projections, released on the 1st by the State, showed that revenue increased R $ 81 billion, double the amount that would be obtained with the check tax (CPMF). The end of the CPMF did not, therefore, affect the collection, contrary to what President Lula says.

The load increased 0,7 percentage point of GDP, says Khair. The novelty is that States were the ones that obtained the most revenue in 2008, in contrast to what happened until 2007.

Between 2003 and 2007, according to the Federal Revenue, the share of States in the collection had fallen from 26,76% to 25,58% and that of the municipalities, from 4,45% to 4,41% - always in relation to GDP. In 2008, Khair calculates, States collected +0,42 percentage point of GDP and the Union +0,25 pp

ICMS revenue, the main state tax, grew 13,4% more than inflation until October. This was due to the increase in domestic consumption, the expansion of programs against evasion, such as the Nota Fiscal Paulista, and, above all, the entry of more products in the tax substitution regime. Manufacturers of vehicles, cigarettes, soft drinks, beers, cement and paints, among others, collect ICMS before sale to the consumer. The food, hygiene, building material, medicine and cleaning material sectors have just entered this regime. Supersimples also brought high taxes, says consultant Clóvis Panzarini.

As some changes are recent, it is possible that the economic slowdown has little effect on the tax burden. Even if the Union receives less income tax on company profits and the new income tax table is in force, which benefits individuals, a further increase in the weight of states and municipalities in revenue is likely.

In order to maintain the collection, the federal tax authorities promise to squeeze the biggest taxpayers to the maximum, who will have “different treatment”, according to secretary Lina Maria Vieira. It is possible that companies will try to pass this cost increase on to consumers.

If the efficiency of the Federal Revenue is maintained, the Brazilian cargo will remain among the largest in the world, without the counterpart of quality services. It will certainly serve to finance personnel expenses in addition to inflation.