Author: Marcos Cintra

Source: JB Online - Rio de Janeiro / RJ - 15/07/2010

Marcos Cintra, Jornal do Brasil

RIO - In partnership with the American Chamber of Commerce (Amcham) Ibope interviewed 211 directors of large and medium-sized companies in ten Brazilian cities to determine the main obstacles to the competitiveness of business in the country. The survey, carried out between the end of April and mid-May 2010, included companies that have, on average, 333 employees.

According to the survey, the tax burden is the item that most hurts the business of companies in Brazil. For a significant majority of directors, the weight of taxes “affects very negatively” business activity. Subsequently, the issues identified as barriers to production were the legal structure related to taxes and the way they are collected and also the management of public resources.

When asked what makes it more difficult to attract foreign investment in Brazil, taxes are again cited. The tax organization is pointed out as the element that “makes it more difficult” for foreign resources to be used in production in the country.

The vast majority of those interviewed by Ibope pointed out the rationalization of the tax system as the number one action to be taken by the government, and then the need to change the legislation related to taxes is cited. Two items appear in the same number of citations as a way of rationalizing the tax structure: one is the reduction of the amount of taxes, and the other is the implementation of the Single Tax. As for changing tax laws, respondents admitted that this is a measure that should simplify the structure.

In summary, the survey revealed that the productive sector wants a simplified tax model and that it is less costly for companies, in such a way that production becomes more competitive. The conclusion is that for this objective to be achieved the alternative would be the creation of the Single Tax.

Ibope's research further reinforces the consensus that the country needs a tax reform along the lines of the Single Tax. Brazil has the worst tax system in the world, according to a survey by the World Economic Forum released in 2009, and this situation will deepen if its remodeling continues, as it has been happening for 15 years, or if one tries to carry it out. through proposals that do not effectively affect the tax collection structure.

Amcham's initiative was extremely timely at a time when the country is preparing to choose the new president and new parliamentarians. Candidates need to speak out about this fundamental demand for Brazil, which is tax reform, but it is essential that they take clear or objective positions, differently from what they have done so far, on the implementation of a new tax system and on the Single Tax project.

The directors consulted by Ibope, who live the companies' daily lives, assimilated the benefits that the Single Tax can generate for the competitiveness of national production, and the politicians who wish to direct the country in the coming years cannot ignore about a question that interests everyone. In other words, the topic is of interest to workers, companies and the government itself.

Marcos Cintra holds a PhD in Economics from Harvard University (USA), full professor and vice president of Fundação Getulio Vargas.