Source: Diário de Sorocaba, 22/04/2009

Tax reform is going to die a dead death. She will not die of death killed at the hands of opposition to the government. Nor by economists, teachers, intellectuals and politicians engaged in personal or party projects. The current project was sentenced to death for creative poverty and for its own inconsistencies, defects and inaccuracies.

Despite the peremptory statements, repeated every semester by the last governments that “this time the reform passes”, the probability of this occurring is minimal, if not to say null. This is because since 1992, when an attempt was made to revise the 1988 Constitution, the proposals submitted by the government to the Chamber of Deputies have always been the same, with minor occasional variations.

In reality, the pseudo-reformists of the past sixteen years have done nothing but repeat old and frayed buzzwords of introductory public finance textbooks, such as the uncritical repudiation of the “evils of cumulativeness” and the inconsequential apology for value added taxes. At the same time, they close their eyes to the real problems that afflict Brazilian taxation, such as the pantagruelian bureaucracy that took over the system, the infamous corruption that arose from the putrefaction of relations between government and taxpayers and the discouragement of production and job creation caused by explosion of operating and administrative costs imposed by accessory tax obligations. We all forget that these nefarious features of our tax model are a direct consequence of the “ideal” model built in the ivory academic towers. The consequence is tributary Darwinism generating deformed monsters, but highly adapted to the dysfunctional impositions of a technocracy taken by the “delirium tremens” of bureaucratic intoxication.

The proposal approved by the Special Tax Reform Commission is the maximum expression of these distortions. The concepts are imprecise and profoundly alter the volume of revenues available to the country's federative units, as has been valiantly demonstrated by Governor José Serra, not because of the unstoppable greed of rich state governors, as the government representatives claim, but out of pure civility federative and due to refined technical rigor. The tax sharing devices seek to achieve a level of fine tuning to guarantee distributive neutrality that border on the laughable and only exacerbate the suspicion that the allocation of revenues will become an obscure process of voluntarism by the governing group. The complexity of the processes, the transitional provisions and the lengthened and uneven deadlines for their implementation make the state and municipal governments increasingly resistant to any loss of tax competence.

The tax reform claimed by Brazilian society is not the one being discussed in Brasilia. It does not simplify, it increases the complexity in the sharing process, it shuffles the current tax competences and, probably, it will increase the tax burden of taxpayers. The inevitable result will be an increase in evasion, corruption, unfair competition between those who evade the most against their obligations and the loss of competitiveness of the national economy.

There is only one way: to let her die a victim of her own problems.