Informality in the economy


Author: Joseph Couri *

Source: Gazeta Mercantil, Opinion, 09/01/2007

The willingness announced by President Lula to remove the obstacles that prevent the economy from growing at the pace necessary to solve Brazil's needs is extremely important and timely. The range of rules and regulations that hamper various economic sectors, the overlapping of tax legislation - only the ICMS has more than 27 different laws - and the excessive bureaucracy that permeates the state's relations with the private sector are obstacles that discourage investors and hinder investors economic growth.

In this context, a discussion has long been necessary: ​​that of the informality of the economy. Government, parties, businessmen, workers and academics need - and can - find formulas that allow the absorption of this immense contingent of entrepreneurs and workers by the formal economy, thus generating the resources necessary for the balance of Social Security and the reinforcement of health budgets, education and other needy social areas.

At the beginning of this decade, the IRS reported that, for each real paid, another was withheld. The Ministry of Social Security reports that Brazilians who work and pay contributions to the INSS do not reach 30 million, while more than 40 million do not pay. Of these, it is estimated that only 18,7 million could, by income, do so. This is an exemplary case of adjusting standards, indispensable if we are to build a just society, preserving the integrity of Social Security to serve the large masses of Brazilian society. But the Social Security crisis is also that of unemployment, which will only be reversed with growth.

It is evident that, within this framework, the recent General Law on Microenterprise constitutes an important step in encouraging formality. But not enough to make the invisible economy visible. For that, smart formulas are needed, which can - and need to be - developed by the creativity and ingenuity of the joint action of government and civil society. One of the obstacles to bringing about this transformation from informal to formal is in criminal-criminal legislation. For the entrepreneur to migrate smoothly to the formal system, it is not enough, for example, to register the employee in his portfolio or start to collect the tax that he did not collect. The crimes of tax evasion and labor rights resulting from informality do not prescribe because they are no longer configured. And this constitutes one of the major disincentives or obstacles, for the entrepreneur to legalize his situation.

Therefore, there is an interesting topic for joint reflection by the government and society, at the moment when both look at the formulas that may lead the country to the long-awaited spectacle of growth, which necessarily involves the removal of this and other significant obstacles.

A considerable challenge, as well as the benefits resulting from overcoming them will also be considerable.

* President of the Micro and Small Industry Union of the State of São Paulo (Simpi)