The cursed legacy of informality


Source: O Globo - 31/10/2010

BRASILIA. In real Brazil that will be inherited by the new president, one of the challenges will be the problem of informality. Translated into numbers, the underground economy generates around R $ 600 billion, equivalent to 17% of the Gross Domestic Product (GDP).

And it subtracts from the public coffers R $ 200 billion a year, a mountain of resources that would give to multiply the volume of investments of the Union for four times or to triple the health budget. Incorporated into legal Brazil, this economy that operates on the margins would allow a 2011% reduction in the tax burden, experts estimate.

The accelerated growth of the economy is a stimulus to the formalization of work and companies.

The advances in recent years in this direction are unquestionable, but insufficient to solve the problem of informality, which harms the country in several ways, not only due to losses in revenue.

- The informal worker loses the protection of the law, the taxpayer pays more, the consumer is harmed because he has no guarantee in purchases, good entrepreneurs lose with unfair competition - highlights economist André Montoro, executive president of the Brazilian Institute of Ethics in Competition ( Etco), which in July released, with the Getulio Vargas Foundation, the Underground Economy Index for 2009, with the dimensions of this market

'They are not romantic street vendors', says economist Montoro notes that it is necessary to demystify the romantic view that informality and piracy support small entrepreneurs, people who struggle for survival.

- They are not romantic street vendors, they are people paid by gangs and distribution networks.

It is a broader problem, of illegality and disregard for laws, a public problem. The work of artisans, of small entrepreneurs, should be valued with encouragement to formalization - he says.

Simplifying and reducing bureaucracy in the tax burden is very important to reduce the underground economy, in the expert's view, as well as modernizing inspection systems.

- The reduction of the generalized tax burden is difficult, because government spending only increases, but reducing bureaucracy is feasible and has a cost impact for companies - highlights the economist, who points out the electronic invoice as an essential advance. - Computerization has a moralizing aspect, as it prevents bad tax officials from negotiating with bad payers.

The manager of the national job search at IBGE, Cimar Azeredo, points out that a change in the structure of the labor market, with increased outsourcing, encourages formalization.

The most serious problems are in precarious areas, such as small businesses in low-income areas, where inspection is not very active and traders lack support. He defends public policies that support these segments with stimulus and information, and highlights that the way to reduce informality in the country is to invest heavily in education: - It is necessary to eliminate functional illiteracy, the channel remains education.